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ECB seen delivering three more 25bp hikes to a 3% deposit rate

Nordea points to building inflation pressures from prior energy price increases, supply chain strains, and Euro-area growth as the drivers for the ECB path.

Reported · Written up by our desk · Central Banks

Nordea’s Ole Håkon Eek-Nielsen and Jan von Gerich expect the European Central Bank to raise its deposit rate by three additional 25 basis points, taking it to 3%. In their view, the ECB’s trajectory reflects gradually building inflation pressures after earlier energy price rises, ongoing strained supply chains, solid growth across the euro area, and low unemployment.

They also flag that the rate path faces wide risks, including uncertainty tied to developments in the Middle East and disruptions in energy markets.

In FX markets, FXStreet says GBP/USD advanced to a fresh monthly high above 1.3550, trading around that level in the American session. The outlet attributes the move in part to a weaker US dollar following disappointing US retail sales, which also supported a more bullish tone for EUR/USD above 1.1500.

FXStreet adds that gold rebounded after nearing $4,300 earlier and closed in on $4,400, with easing expectations for a US rate hike in September helping attract demand. Separately, it notes the University of Michigan is set to release the preliminary August consumer sentiment estimate, with the index expected to fall to 54.5 from 55.2 in July.

Latest closeGold $4,408.20 ▼0.0%|EUR/USD 1.153 ▼0.1%|GBP/USD 1.349 ▼0.2%

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