Sept 4 (Reuters) – J.P. Morgan and BNP Paribas said on Thursday they expect the European Central Bank to deliver \u200canother 25-basis-point rate hike in December, as persistent inflation \u200crisks and elevated energy prices strengthen the case for further tightening. <\/p>\n
Both brokerages had previously \u200bexpected the ECB’s tightening cycle to end without a December rate increase. <\/p>\n
The revised outlooks suggest borrowing costs in the euro zone will remain elevated for longer than previously anticipated, reflecting resilient regional economic \u200cgrowth and ongoing energy \u2060supply concerns. <\/p>\n
“We think the persistence of the energy shock and the resilience of the economy make second-round \u2060effects more likely to materialise,” said analysts at BNP Paribas in a note. Markets have almost fully priced in a 25-basis-point interest rate \u200bhike by \u200bthe European Central Bank at \u200bits September 10 policy meeting, \u200cindicating a 99.2% probability, according to data compiled by LSEG. <\/p>\n
Oil prices eased but remained above $95 a barrel. At the same time, eurozone bond yields retreated from multiyear highs, following recent market pressure as the escalating conflict in Iran boosted energy prices, stoking fears \u200cof persistent inflation and tighter monetary policy. <\/p>\n
J.P. \u200bMorgan said “an interaction between more persistent \u200benergy price pressures, solid \u200bgrowth, sticky core inflation and a neutral rate that \u200cthe ECB sees edging higher” \u200bwould be the \u200breason for a further rate hike in December. <\/p>\n
BNP Paribas expects the ECB to hike interest rates by 25 bps at \u200bits meeting next week \u200cwhile leaving the door wide open to delivering more \u200bif evidence of second-round effects builds. <\/p>\n
(Reporting by Akriti Shah \u200bin Bengaluru; Editing by Jochelle Mendonca) <\/p>\n","protected":false},"excerpt":{"rendered":"Sept 4 (Reuters) – J.P. Morgan and BNP Paribas said on Thursday they expect the European Central Bank…\n","protected":false},"author":2,"featured_media":671953,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[174],"tags":[121021,42362,79,64900,4393,179,18,19,17,284108,109592,22956,281841],"class_list":["post-671952","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-121021","tag-bnp-paribas","tag-business","tag-december","tag-ecb","tag-economy","tag-eire","tag-ie","tag-ireland","tag-j-p","tag-j-p-morgan","tag-reuters","tag-sept-4"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/117211964595798784","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/671952","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=671952"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/671952\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/671953"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=671952"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=671952"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=671952"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}