(Reuters) - Deutsche Bank pulled forward its forecast for a rate hike from the European Central Bank to as soon as December 2022 on Monday, with the German lender saying its latest inflation forecasts showed the bank's inflation target would be met earlier than expected.
Analysts at the German bank expect the ECB to hike rates by 25 basis-points in as early as December 2022 and by June 2023 at the latest, compared to a previous expectation of 10 bps in December 2023. While this is not a consensus call among analysts, money markets are pricing in nearly two rate hikes from the ECB by end-2022.
Deutsche Bank analysts also accelerated the pace of tightening they expect. The deposit rate, currently at -0.50%, will be hiked 25 bps per quarter until reaching 0.50% in September 2023, they wrote, compared to 10 bps hikes that reached 0% in December 2024 previously.
Less frequent hikes will follow until the ECB reaches a terminal rate at 1% in December 2024, the bank's analysts wrote, two years earlier than they previously expected.
Expectations of an earlier rate hike also led the analysts to revise up their euro forecast. They now expect the euro at 1.15 against the dollar by the end of the year, compared to 1.08 previously.
(Reporting by Yoruk Bahceli, editing by Karin Strohecker)