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POLL-ECB to hike deposit rate by 50 bps on Dec 15 as block enters winter recession

Jonathan Cable

London, December 9 (Reuters)A Reuters poll shows that the European Central Bank will raise deposit rates by 50 basis points to 2.00% next week.

The ECB has hiked interest rates at its fastest pace ever since it started to fight inflation in July, already raising the main deposit rate by an additional 200 basis points to 1.50%.

A Reuters poll for Dec. 5-8 shows banks will return 2.00% on deposits after Thursday’s meeting of policymakers. 2009The refinancing rate will also increase by 50 basis points to 2.50%.

Fifty-one of the 60 economists surveyed held the median deposit rate, with two saying the ECB would be more cautious and seven saying it would be more aggressive.

When we last met in late October, Board of directors We raised key interest rates by 75 basis points.

The US Federal Reserve is also widely expected to downshift to a 50 basis point move following four consecutive 75 basis point gains at the end of Wednesday’s policy meeting, a day before the ECB’s decision. . ECILT/United States

“Next week’s ECB meeting will be one of the few meetings where central banks will make decisions after the Fed, not before. Karsten Brzeski of ING.

“Lower headline inflation says little about the impact of rate hikes so far, but at least it could remove some of the urgency to continue jumbo rate hikes.”

price hike Last month was well below expectations at 10.0% y/y, suggesting that inflation in the 19 euro-using countries may have peaked, increasing the likelihood that the ECB will slow its rise. I’m here.

The poll results agreed, showing inflation to peak at 10.3% for the quarter before declining. However, the bank’s 2.0% target was not reached at any point in the poll through 2025.

ECB President Christine Lagarde hinted at the bank’s final meeting that it would launch plans this month to reduce its bond holdings under its asset purchase program.

Opinion polls suggest a €175bn decline in share prices next year, with expectations ranging from €75bn to €600bn.

turn on the heating

Policy makers face the dilemma of tightening policy just as a currency bloc is headed for recession. Poll respondents said he had a median 80% chance within a year.

The survey’s quarterly projections show the economy contracting 0.3% this quarter and 0.4% next, meeting the technical definition of a recession. It then flattens out in Q2 and expands 0.3% in his last two quarters of 2023.

A poll of 69 economists earlier this year showed a 3.2% expansion in 2023 before contracting by 0.1%. It will grow by 1.3% in 2024.

When asked what kind of recession the bloc would withstand, the majority of respondents said it was short and shallow, but 20 of 30 economists warned of downside risks to growth projections. .

Luca Mezzomo, Intesa Sanpaolo, said: “We expect the short-term recession associated with the energy shocks in Q4 2022 and Q1 2023 to be mitigated by government actions, followed by a gradual recovery from Q2. increase.

Energy costs skyrocketed after Russia’s invasion of Ukraine, but many governments have introduced price caps and subsidies to support consumers as their citizens head into winter and need to heat their homes.

(Reporting by Jonathan Cable; Poll by Aditi Verma and Maneesh Kumar; Editing by Ross Finley and Catherine Evans)

((jonathan.cable@thomsonreuters.com+44 20 7513 4029;))

The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/poll-ecb-to-raise-deposit-rate-by-50-bps-on-dec-15-as-bloc-enters-winter-recession POLL-ECB to hike deposit rate by 50 bps on Dec 15 as block enters winter recession

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