European Central Bank: December hike signalled as markets overprice path – Nomura
Nomura’s Andrzej Szczepaniak, George Buckley and Josie Anderson expect the ECB to keep the depo rate at 2.50% on 29 October, maintaining current quantitative tightening guidance.
Nomura's analysts anticipate the European Central Bank (ECB) to maintain the deposit rate at 2.50% during their meeting on October 29th. They project further rate hikes in December 2026 and March 2027, aiming to reach a terminal rate of 3.00%. The current market pricing suggests around 75 basis points (bp) in hikes by September 2027, which the analysts consider excessive.
They believe the European Central Bank (ECB) will wait to evaluate the impact of previous rate hikes on the euro area economy and assess how wage negotiations have evolved in Q4 2026. Markets currently price a significant level of hikes by September 2027, which Nomura's team deems overpriced, and they expect the ECB to fail to validate such pricing during the press conference.
As a result, they anticipate a rally during the press conference and believe markets will price marginally less for the ECB's terminal rate by the end of the press conference than at the start.
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