UBS raises expectations for ECB's terminal rate; SocGen sees it peaking at 4%

May 5 (Reuters) - Economists at UBS expect the benchmark interest rate in the eurozone to peak at 3.75%, while Societe Generale sees it at 4% after the European Central Bank (ECB) signalled more tightening ahead.

The central bank slowed the pace of rate increases on Thursday by delivering a quarter percentage point hike, raising the terminal rate to 3.25%.

However, UBS expects a pause after July as it sees inflation declining slowly over the summer.

Goldman Sachs and Bank of America also expect the rate to peak at 3.75%, although BofA sees a "significantly" higher chance of rates hitting 4%.

Societe Generale expects three more hikes as it sees the eurozone's core inflation staying elevated without showing convincing signs of weakening until September.

The ECB euro short-term rate (ESTR) September 2023 forward was around 3.6%, implying an ECB deposit rate peak of 3.7% by this summer.

Reporting by Aniruddha Ghosh in Bengaluru; Editing by Rashmi Aich

Reuters

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

off-the-wire

UBS raises expectations for ECB's terminal rate; SocGen sees it peaking at 4%

By Reuters

Reuters

Reuters

Gold is never going back to $2,000: 'That's history,' prices to 3x from here – Peter Schiff

‘Biggest economic shift since Nixon’: Major U.S. monetary policy changes coming in 12-36 months – Jack Mallers

India joins South Africa in denying BRICS currency plans after Trump’s 100% tariff threat

Solid price gains for gold, silver after busy news weekend

Bitcoin remains a ‘speculative vehicle’ and ‘won’t work’ as a reserve: ‘I prefer gold’ – Ray Dalio