ECB to raise deposit rate to 0.75% by year-end – Reuters poll

The European Central Bank (ECB) will raise its deposit rate above zero for the first time in a decade in September, according to most economists polled by Reuters. The survey also portrays expectations of a rate hike at least 50 basis points higher than previously anticipated by year-end.

Key findings

The June 15-22 poll showed all but two of the 55 economists expected the ECB to deliver a quarter-point raise on July 21 to -0.25%.

Two expected it to hike by 50 basis points, compared to none in the last poll.

A strong majority of 91% or 50 of 55 economists expected the Bank to hike its policy rate by 50 basis points in September, taking the deposit rate out of negative territory to 0.25%.

Last month forecasters were expecting the ECB to wait until the fourth quarter to bring the deposit rate, currently -0.50%, to positive territory.

About 60% or 33 of 55 economists saw another 25 basis point hike in October and about 85% or 47 of 55 expected the same rise in December, bringing the deposit rate to 0.75% by end-year.

But some forecasts for where it would be by end-December were as high as 1.25%, underscoring the possibility of bigger moves.

The poll predicted 25 basis point hikes in the first, second and third quarters next year, pushing the deposit rate to 1.50%, within the terminal rate range of 1.25%-1.50%.

The economy was expected to grow 2.6% on average during 2022 and then expand 1.8% next year, median forecasts of about 70 economists showed.

Over 70% or 25 of 34 economists said in response to an extra question that eurozone inflation was yet to peak. Twenty said it would happen in the third quarter, four said this quarter and one said in the fourth quarter.

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