The European Central Bank may stop raising interest rates at 3.5

SHAFAQNA TURKEY – Investment banks are raising their forecasts for peak interest rates one by one after signs of inflation persisting. Goldman Sachs predicts that the European Central Bank (ECB) will stop tightening monetary policy at 3.5% on deposit rates.

Economists including Jari Sten predicted a 25 basis point hike in interest rates in June, citing hawkish remarks by ECB board member Isabelle Schnabel.

The ECB deposit rate is currently at 2.5 percent and ECB members are signaling a 50 basis point hike at their meeting next month. Economists at Goldman said a 50 basis point rate hike is possible in May, but possibly another 25 basis points.

Schnabel, in an interview with Bloomberg published on Feb. 17, claimed that investors had underestimated the persistence of inflation and said: “We may have to take more drastic steps.”

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