At the European Central Bank’s(ECB) meeting on 8th September 2022, the decision was made to increase its three key interest rates by 75 basis points making the deposit rates 0.75%. Expectations of the Economists at Commerzbank are that the deposit rate will be increased to 3.0% by March next year.
The ECB signals reflect that it wants to attain a neutral interest rate of 2% by year-end. The ECB is ready to raise the interest rate in favor of noticeable rate hikes in the nearest future. This readiness will probably increase in the subsequent months due to the central bank’s likelihood to hike its inflation projection noticeably.
There is a prediction that the ECB to suspend the interest rate hike process for roughly one year starting next spring. This is due to the expected recession by many, which should be visible in the GDP data, and the expected hike of the deposit rate to 3% which should be noticeably higher than the neutral level from the ECB’s viewpoint.