Nomura revises ECB call, projecting three additional 25bp hikes after new staff projections show persistent core inflation.
Nomura now expects the European Central Bank to raise its deposit rate to 3.00% by March 2027, up from a prior 2.50% terminal view. The revision follows the ECB’s latest forecasts, which show core HICP inflation remaining above target in 2028 despite embedded rate hikes.
The ECB’s June projections revised GDP growth modestly, excluding a significant slowdown from geopolitical risks. Core inflation forecasts were notably hawkish, contrasting with a dovish tone from President Lagarde during communication.
Nomura’s updated call includes 25bp hikes in September, December, and March 2027, adding one more increase than previously anticipated. The shift reflects persistent inflation concerns despite recent policy tightening.