According to the latest Reuters poll of 40 economists, the European Central Bank (ECB) could embark upon its interest rate tightening cycle earlier than the previously expected forecast of a hike in 2024.
Key findings
“The October 18-21 Businesshala poll consensus pointed to no rate hike until the end of 2023, but nearly 90% of economists answering an additional question, 35 out of 40, said the risk came earlier than expected.”
“Poll moderators showed the ECB deposit rate at -0.50% and the refinancing rate unchanged at zero until the end of 2023. A small sample observed for more than two years showed the deposit rate at -0.30% and the REFI rate at zero by the end of 2024.”
“Three-quarters of economists who held the view that in the future, exactly 18 out of 24, expect at least one rate hike in 2024.”
“When asked about the quantum of its regular asset purchase program (APP) beyond that date, the middle of 29 responses currently bought 40 billion euros worth of bonds, compared to 20 billion euros each month. The highest forecast was 65 billion euros.”
“When asked about greater concern for the euro area economy in the coming year, nearly two-thirds of the respondents, or 27 in 42, said it was a larger than expected slowdown in economic growth. The rest said persistently high inflation.”
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