ECB Rate Hike Expectations Heat Up with Forecast for another 125 Basis Points Hike this Year

Since the economy in the eurozone is more resilient than expected and the inflation remains heated, market players are betting that the ECB will raise interest rates to record levels this year.

On February 22, some media report that ECB will raise rates aggressively this year to a peak of about 3.75% in September, which will be equivalent to the peak level in 2001. This implies that a further 125 basis points need to be added to the interest rate.

Since last July, the ECB has raised rates by a cumulative 3 percentage points to 2.5% and has pledged to raise rates by another 0.5 percentage points by March. In the past week, Goldman Sachs, Barclays and Berenberg all upgraded their forecasts for the peak of ECB rate hike to 3.5%, while Deutsche Bank even raised its forecast to 3.75% this Wednesday.