ECB to go big again on October 27 with 75 bps rate hike – Reuters poll
19.10.2022, 01:15

ECB to go big again on October 27 with 75 bps rate hike – Reuters poll

The European Central Bank (ECB) will go for another jumbo 75 basis point increase to its deposit and refinancing rates when it meets on Oct. 27 as it tries to contain inflation running at five times its target, a Reuters poll found.

Key findings

The ECB targets inflation at 2.0%, yet it was 10.0% last month. It will average at a peak of 9.6% this quarter, higher than thought last month, before gradually drifting down but will not reach target until late 2024, the poll found.

The bloc's central bank will take the deposit rate to 1.50% and the refinancing rate to 2.00% next Thursday, a view held by an overwhelming majority of respondents in the Oct. 12-18 Reuters poll of more than 60 economists.

Three-quarters of respondents to an additional question, 27 of 36, said the bank ought to choose a 75 basis point lift to the deposit rate while two said it should go harder with a 100 basis point increase. Only seven recommended 50 basis points.

By year-end the deposit and refinancing rates were forecast to be at 2.00% and 2.50% respectively compared to 1.25% and 2.00% predicted in a September poll.

Two hawks on the ECB's Governing Council called last week for more hikes to fight runaway price rises. But the central bank is also facing a recession in the bloc and economists in the poll gave a median chance of 70% of one within a year.

Asked what type of recession it would be, 22 of 46 respondents said it would be short and shallow while 15 said it would be long and shallow. Eight said it would be short and deep and only one said it would be long and deep.

Also read: EUR/USD Price Analysis: Retreats from five-week-old resistance towards 0.9820 EMA support

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