Final hours! Save up to 55% OFF InvestingProCLAIM SALE

UBS raises expectations for ECB's terminal rate; SocGen sees it peaking at 4%

Published 05/05/2023, 09:57
Updated 05/05/2023, 11:36
© Reuters. FILE PHOTO: A logo of Swiss bank UBS is seen in Zurich, Switzerland March 29, 2023. REUTERS/Denis Balibouse
UBSG
-

(Reuters) -Economists at UBS expect the benchmark interest rate in the eurozone to peak at 3.75%, while Societe Generale (EPA:SOGN) sees it at 4% after the European Central Bank (ECB) signalled more tightening ahead.

The central bank slowed the pace of rate increases on Thursday by delivering a quarter percentage point hike, raising the terminal rate to 3.25%.

However, UBS expects a pause after July as it sees inflation declining slowly over the summer.

Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) also expect the rate to peak at 3.75%, although BofA sees a "significantly" higher chance of rates hitting 4%.

© Reuters. FILE PHOTO: A logo of Swiss bank UBS is seen in Zurich, Switzerland March 29, 2023. REUTERS/Denis Balibouse

Societe Generale expects three more hikes as it sees the eurozone's core inflation staying elevated without showing convincing signs of weakening until September.

The ECB euro short-term rate (ESTR) September 2023 forward was around 3.6%, implying an ECB deposit rate peak of 3.7% by this summer.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.