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Commerzbank expects ECB to hold July rates, hike in September
The bank links its view to euro area inflation staying just below 3% and core inflation plus inflation expectations trending higher.
Commerzbank economists expect the European Central Bank to leave policy rates unchanged at its July meeting, but they still see another 25 basis point increase in September.
In a note highlighted by FXStreet, the economists say their ChatECB AI indicator remains hawkish, while they forecast euro area inflation to stay just under 3% despite core inflation and inflation expectations moving higher.
They argue that pass-through effects from higher energy costs and rising expectations could make inflation more persistent, which would strengthen the case for further tightening from the ECB.
Commerzbank also points out that the ECB deposit rate is 2.50%, which it says remains within the neutral-rate range and therefore likely not restrictive yet, keeping September in focus.