ECB to hike deposit rate 25 bps in July, ditch negative rates by end-Sept – Reuters poll
17.05.2022, 00:12

ECB to hike deposit rate 25 bps in July, ditch negative rates by end-Sept – Reuters poll

“The European Central Bank (ECB) is expected to raise the deposit rate for the first time in over a decade in July and bring it out of negative territory at its following meeting in September, despite a 30% chance of recession within a year,” per the latest Reuters poll of economists.

Key quotes

Of the 46 of 48 economists who expect the deposit rate to rise in the third quarter, 26 said rates would rise by 50 basis points by the end of the period, implying quarter-point moves at both the July and September meetings.

Another 18 respondents said the deposit rate would only rise 25 basis points in Q3 and two said it would only climb 10 basis points to -0.40% by the end of the quarter.

An even clearer majority expect rates to no longer be negative by the end of the year. About 90% of economists, or 43 of 48, said the deposit rate would be 0% or higher by then, with 44%, or 21 of 48, saying it would be at 0.25% by then and 8%, or 4 of 48, saying it would be at 0.50%.

The latest poll results are still lagging rate futures, which are pricing in a cumulative 90 basis points of rate increases for the rest of the year or between three and four 25 basis-point moves.

EUR/USD stays firmer

EUR/USD takes the bids to refresh intraday high around 1.0450, up for the third consecutive day, as traders cheer softer USD and mildly upbeat market sentiment during a quiet session.

Read: EUR/USD struggles around 1.0440 ahead of US Retail Sales and Eurozone GDP

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