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Goldman Sachs expects ECB to raise rates by 75 basis points in September

Sam Boughedda

Goldman Sachs analysts said the firm now expects the ECB to raise interest rates in September 75 bp.

These comments come from Inflation data for the Eurozone , “Surprisingly upside.”

“First , today’s inflation data rose further, with headline HICP climbing to 9.1% y/y and importantly, core HICP rising to 4.3% in another strong consecutive monthly print. We expect inflationary pressures to rise further in the coming months as 9 – Germany’s euro fare ends, high energy prices impact retail prices, core inflation peaked at 4.6% in September, with headline inflation approaching 10% in Q4,” explained Said

Analysts acknowledged that new activity indicators have performed better than expected so far, and they see upside risks to forecasts of a slight contraction in the third quarter. However, Goldman Sachs remains comfortable with their forecast for a euro zone recession, given the continued tightness in European gas markets, “but expects a mild recession.”

They also noted that the ECB’s recent comments were hawkish , because they see another reason for the 75 bp hike.

“Given today’s stronger-than-expected inflation data – coupled with hawkish comments and close upside risks – long-term growth – we now expect the Governing Council to raise rates at its September meeting 75bp and raised our forecast for terminal rates to 1.% February2023,” analysts concluded.



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