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ECB: Period of unchanged rates may last deeper into 2020 – ABN AMRO

Analysts at ABN AMRO suggest that their current baseline scenario is that the ECB will keep interest rates unchanged until March 2020 and will hike its policy rates modestly by 20bp next year.

Key Quotes

“We expect the central bank to change its forward guidance in coming months to communicate that policy rates will likely remain on hold through 2019. The changes in our economic growth forecasts for the eurozone raise the risk that the ECB will keep interest rates on hold deeper into 2020. This is because lower economic growth will likely translate into an (even more) subdued outlook for core inflation.”

“The current consensus of analysts recorded in a Bloomberg Survey last month, is that the ECB will hike by 25bp by the end of 2019 and by a cumulative 65bp by the end of 2020. However, financial markets have shifted closer to our current base case, with the first hike fully priced in only in March/April 2020.”

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