On June 14, Patrick Barbe, head of the European investment-grade fixed income department of Neuberger Berman, an international asset management company, said that market expectations have recently shifted to support the European Central Bank’s adoption of stable policies in the second half of this year.
Most economists have raised their core inflation forecasts for the coming quarters, and the ECB will start cutting key interest rates only if inflation falls sharply, he said.
Barbe expects the ECB to raise interest rates by 25 basis points on Thursday, in line with market expectations, followed by another 25 basis points in July.
With a 12- to 24-month lag in the impact of rate hikes, the ECB’s new forecasts are likely to show lower risks of rising wages, slower growth and inflation going forward, he said.