Goldman's ECB interest rate forecast

Goldman Sachs has predicted that the European Central Bank (ECB) will end its monetary tightening at 3.5 percent deposit rate. As signs of persistent inflation appear, investment banks are one by one raising their peak interest rate forecasts. Goldman Sachs has predicted that the European Central Bank (ECB) will end its monetary tightening at 3.5 percent deposit rate. Economists including Jari Stehn, citing hawkish statements by ECB Governing Board Member Isabel Schnabel, have predicted another 25 basis point rate hike in June. The ECB deposit rate is currently at 2.5 percent and ECB members are signaling a 50 basis point rate hike at next month’s meeting. Goldman economists stated that a 50 basis point rate hike could be an option in May, but another 25 basis points was possible. Schnabel said in an interview with Bloomberg published on February 17 that investors were underestimating the longevity of inflation and said, “We may need to take stronger action.”