(This April 18 story has been corrected to say 'signs of underlying inflation remaining strong' instead of 'signs of cooling inflation' in paragraph 1)
(Reuters) - Goldman Sachs (NYSE:GS) on Tuesday raised its terminal rate forecast for the European Central Bank (ECB) to 3.75% from 3.5%, citing easing worries about the banking system, signs of underlying inflation remaining strong and generally hawkish commentary from policymakers.
Goldman economists expect the ECB to raise rates by 25 basis points (bps) in May, June and July, but said the choice between a 25 bps and a 50 bps increase in May will be a close call due to lower banking risks, growth resilience and strength in underlying inflation.