ECB Tightening Cycle May Be Over

Qatar National Bank (QNB) is predicting that the European Central Bank (ECB) has reached the end of its tightening cycle. The bank cited easing inflation risks, a weakening growth outlook for the Euro Area, and a shift in ECB policymakers' stance as reasons for this assessment.

The ECB raised its deposit rate by 25 basis points in June to prevent an energy shock from becoming a broader inflation problem. However, QNB notes that recent data suggest the inflation shock is likely to be temporary and that further monetary tightening may not be necessary.

The bank highlighted three key factors supporting this assessment: easing inflation risks, a weakening growth outlook for the Euro Area, and a shift in ECB policymakers' stance.