Goldman Sachs stated that it expects a 50 basis point increase in interest rates from the ECB in the May meeting after the March meeting.
The bank had expected the ECB to raise the deposit rate by 25 basis points in May.
With the upward revision of the May rate hike expectation, the expectation that the BoE deposit rate will peak at 3.50 percent in June was also revised as 3.75 percent.
Money markets are pricing in that the ECB’s interest rate will peak at 3.85 percent in December.
In its investor note, Goldman Sachs said, “It is still possible to reduce the rate of interest rate hike to 25 basis points in May, but this is no longer our baseline scenario. We also maintain our view that the Governing Council will keep the interest rate at its peak until the fourth quarter of 2024.”