ECB Rate Hike Looms as Goldman Sees 2.75% Peak

Goldman Sachs economist Sven Jari Stehn believes that the European Central Bank (ECB) will raise the deposit rate again in December to 2.75%. According to Goldman, resilient growth, renewed energy pressure, and a potentially higher neutral rate are supporting this expectation.

The ECB has already raised interest rates several times this year, but Goldman is cautious about what comes next. The firm expects softer underlying inflation and some slowing in growth to raise the hurdle for a faster sequence of hikes.

Goldman's forecast for headline inflation suggests that it will peak at 3.8% year-on-year in Q4 due to renewed energy pressure. However, underlying inflation remains more contained, with core inflation expected to peak at 2.7% in 2027 Q1.