Berenberg Now Sees Higher ECB Peak Rates Before Long Pause

Berenberg has raised their forecasts for peak ECB rates in this cycle:

• "We still expect the ECB to stop at the end of this year. However, for two reasons, we raise our target for the cyclical peak in the ECB’s main refinancing rate from 1.0% to 1.5%. Firstly, the ECB has lifted the starting level for the additional rate hikes to come later this year by increasing rates by 50bp instead of the pre-announced 25bp on 21 July. Secondly, the ECB’s unanimous agreement on a new defence against disruptive market turmoil makes it safer for the central bank to go faster in the next few months."
• Berenberg expects another 50bp hike in September, with 25bp hikes in Oct and Dec before the ECB goes on hold through 2023-24.