Goldman Sachs economists lifted their forecast for where European Central Bank interest rates will settle — reflecting receding tensions in financial markets and persistently strong underlying inflation.
(Bloomberg) — Goldman Sachs economists lifted their forecast for where European Central Bank interest rates will settle — reflecting receding tensions in financial markets and persistently strong underlying inflation.
The Governing Council is set to deliver quarter-point hikes in May, June and July, analysts led by Jari Stehn said Tuesday in a report to clients, calling the choice between 25 or 50 basis points at next month’s meeting a “close call.”
“A half-point move is quite possible with stronger data, including limited signs of a further deterioration of bank lending conditions and a firmer April inflation print,” they said.
“Reasons for a more gradual speed of tightening from here include that the recent banking stresses are likely to leave some mark on bank lending,” according to the report. “We expect some cooling in sequential core inflation in coming months, and the uncertainty around the global outlook has risen.”
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