ECB rate hike timing pushed further back again – Reuters poll

The latest Reuters poll of economists showed that the timing of the European Central Bank (ECB) interest rate hikes is deferred further into the next year amid dwindling economic and inflation outlook.

Key Findings:

“The poll showed the ECB is expected to lift interest rates later next year, but inflation was forecast to remain below the Bank’s target of just under 2 percent for at least the next three years.

Inflation was forecast to average 1.4 percent in 2019, 1.5 percent in 2020 and 1.6 percent in 2021, broadly unchanged from last month.

The consensus was for the euro zone economy to grow between 0.2 and 0.4 percent each quarter through to the end of next year, a slight downgrade from last month. One contributor forecast outright contraction next year.

Of economists with a view that far out, 51 percent predicted rates to have risen by the end of the third quarter next year and over 55 percent expect it by end-2020.

This latest poll was also the first since 2016 when any respondent has forecast the deposit rate would be cut further. 

But over 65 percent of economists who answered an additional question said they were confident the euro zone economy would recover significantly from its current downturn. The remaining said they were not.

The median probability of a recession in the euro zone was unchanged at 20 percent in the next 12 months and 30 percent in the next two years.”