According to Nordea economists Jan von Gerich and Tuuli Koivu, the European Central Bank (ECB) is expected to raise interest rates by 25 basis points at its upcoming June meeting and maintain a hawkish outlook, though without making firm pre-commitments about future moves [1]. The economists project that the ECB will implement four consecutive 25 basis point hikes, which would bring the deposit facility rate to 3% by October [1].
Nordea's analysis suggests that unless there is a further weakening in economic momentum, continued signs of broadening inflation pressures will prompt another 25 basis point hike at the July meeting [1]. The economists note that the ECB's staff forecasts, which assume around three rate hikes in total and still show inflation above target in the coming years, indicate that further hikes may be necessary [1].
The revisions to the ECB's outlook—specifically, expectations for higher inflation and lower growth in the short run—bring the baseline scenario closer to the ECB’s March adverse scenario and align with recent views expressed by ECB official Isabel Schnabel regarding the euro-area economy [1].
No immediate market reactions or analyst opinions beyond Nordea's projections are discussed in the article [1].
CONCLUSION
Nordea anticipates that the ECB will pursue a series of four rate hikes, raising the deposit facility rate to 3% by October, in response to persistent inflation risks. The outlook remains hawkish, with further tightening possible if inflation pressures persist and economic momentum does not weaken. Market participants should monitor upcoming ECB communications for confirmation of this trajectory.