Most Economists See One More ECB Hike But Some Aren’t Sure When

Economists still predict the European Central Bank will raise interest rates one more time — just not necessarily at its next meeting.

(Bloomberg) — Economists still predict the European Central Bank will raise interest rates one more time — just not necessarily at its next meeting.

Most — including those at Goldman Sachs, Morgan Stanley and Citi — do expect a final move to come in September, bringing the deposit rate to a 4% peak. But while ING and J. Safra Sarasin also see one last step, they think it could come later in the year. 

Elsewhere, a sizable group reckons the unprecedented ramp-up in borrowing costs is already over.

The views factor in President Christine Lagarde’s assessment on Thursday, when the ECB hiked by another quarter-point. She stressed that decisions from here will depend on incoming data, with September to bring either a pause or a rate increase but definitely not a cut.

One More Hike in September

Goldman Sachs

“While President Lagarde referred to the possibility of a pause more often and explicitly than we anticipated, she also signaled that the Governing Council is placing significantly more weight on services inflation (which remains firm) than the activity data (which has weakened sharply).”

Morgan Stanley

“Given our expectations on inflation and growth, we maintain our view that the ECB will deliver another 25 basis-point hike in September, and stop there with a terminal rate of 4%. However, September remains a close call, and data could push the decision either way.”


“Unless the ECB’s own projections for headline inflation fall below 2% for 2025, it seems to us that the Council cannot conclude that rates are sufficiently restrictive. And if they must hike at least once more, it seems to us more logical to do it in September (when the projections are published) than in October (when core inflation will likely have fallen more convincingly).”


“Every journey comes to an end… eventually. The ECB acknowledged today there is not necessarily ‘more ground to cover’ and its tightening ‘journey’ might be coming to an end, falling far from pre-committing to further rate hikes and becoming completely ‘data-dependent’ from now onwards. That said, despite the poor recent business sentiment surveys, we believe the upcoming inflation prints, tight labor markets and above-target inflation expectations keep alive the probability of one further 25 basis-point rate hike after the summer, before entering a long monetary pause.”


“Rhetoric was adjusted to reflect the high uncertainty that surrounds the rate outlook as growth prospects darken, disinflation progresses, and the transmission of past tightening intensifies. We stick to our view that a (final) hike in September is more likely than not, but this is a very close call.”


“Although the ECB has left the door open for a pause in September, we believe the Governing Council will opt for a further 25 basis-point hike. To “break the back” of inflation, the ECB must pursue its efforts.”


“Lagarde made it clear that the ECB remains data dependent and makes the decisions meeting-by-meeting, as she referred to the burden of proof is on the incoming data before September. And that also goes beyond that meeting, as a potential hike or pause in September does not give clues about the October decision. I still like the 4% peak policy rate hike that I have had since February, but admittedly this will very much depend on the incoming data.”


“We believe the ECB is slightly more likely than not to hike by a final 25 basis-point before keeping money market rates steady throughout 2024.”


“It now all depends on the central bank’s economic growth and inflation projections in September as to how monetary policy should proceed. Although sentiment indicators are weakening significantly, inflation has not yet been defeated, especially since no relief is coming from wages and the labor market. We therefore continue to expect the key interest rate to be raised to 4% in September.”

One More Hike – But Not Necessarily in September 


“The ECB is again running the risk of being behind the curve. This time not by being too benign on inflation but rather by being too optimistic and too benign on the economic impact of its own policy measures.”

J. Safra Sarasin

“We could imagine that a slowing economy will not necessarily lead to lower underlying inflation rates such that the ECB will be forced to deliver an additional rate hike in H2 2023.”

No More Hikes


“Assuming further data releases over the coming months support the picture of a gradually cooling economy and moderating price pressures, and ECB staff inflation forecasts will be revised lower, we think the ECB will skip hiking rates in September and eventually not raise rates further.”

BNP Paribas

“Lagarde tried to open the door to a Fed-style ‘skip’ scenario. However, if the data are insufficient to justify a September hike, then further rate increases beyond then are relatively unlikely too, or would at least require upside surprises on inflation. That does not mean that rate cuts are likely any time soon, though (our forecast remains for rate cuts beginning in June 2024), and the ECB’s Governing Council would likely push back on any premature pricing of policy easing.”

ABN Amro

“Our base line is that July marked the peak in policy rates and that we will see a pivot around the turn of the year as we expect growth and inflation to come in significantly lower than the ECB projects.”


“There is much to suggest that the ECB will pause in September and will not raise interest rates thereafter. On the other hand, we do not share the markets’ optimism that the ECB will lower its rates again as early as next year. This is because the sharp rise in wages will keep services inflation high. This will prevent inflation from falling further in 2024, so even the dovish-dominated ECB is unlikely to cut its rates next year.”


“With the ECB now squarely in the range of plausible peak rates and increasingly diverging views on the outlook, the Council refrained from giving similar strong guidance for the September meeting, although President Lagarde gave a small hint that she might vote for a hold in September. We maintain our call that today’s hike will prove to be the final one, but risks remain to the upside.”


“With inflation tracking in-line with the ECB’s projections, but growth softening rapidly we think that by the time of the September meeting (when updated staff forecasts will be published) the data is likely to be such that the ECB does not see the need to raise rates further.”

TS Lombard

“Regardless of what happens in September, with the prospect of continued activity slowdown in H2 and faster service disinflation after summer (more on the flash Q2 GDP and July inflation data below), the ECB hiking cycle is over.”

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