Deutsche Bank Raises ECB Rate Forecast to 2.75% Amid Energy Risks

Deutsche Bank has revised its forecast for European Central Bank interest rates, predicting they will peak at 2.75% due to persistent energy-related risks and resilient economic growth. This is a significant increase from their previous estimate of 2.5%, which was based on assumptions that the energy price shock would be temporary and economic growth would weaken.

The bank's research arm cited the ongoing conflict in Iran as a potential upside risk to inflation, although the euro zone labor market remains relatively soft. There is also limited evidence of broad-based price pressures translating into stronger wage growth, according to Deutsche Bank.

The ECB is scheduled to announce its next monetary policy decision on September 10, with markets widely expecting the central bank to raise rates at the meeting. A move above 3% would require broader evidence of persistent inflationary pressures, the bank said. The revised outlook puts Deutsche Bank among a growing number of brokerages expecting additional ECB tightening this year.