Rabobank expects the ECB to raise the deposit rate to 2.25% and signal another hike in September amid elevated inflation forecasts.
The European Central Bank is poised to raise its deposit rate by 25 basis points to 2.25% at today’s meeting, prioritizing inflation control over growth risks. Geopolitical tensions in the Middle East are seen as increasing the cost of policy inaction, outweighing concerns about overtightening.
Inflation projections are expected to be revised upward significantly, while growth forecasts may be downgraded from March’s staff projections. Analysts anticipate a follow-up hike in September, reflecting persistent price pressures despite weaker economic activity.
The decision underscores a hawkish tilt, with policymakers balancing inflation risks against a deteriorating growth outlook.