Nordea Bank Abp

Nordea's team still expects the European Central Bank to deliver two more 25bp rate hikes, in December and March 2027, keeping quarterly increases as its baseline despite more aggressive market pricing. The call puts Nordea at odds with market pricing that has turned more hawkish on the pace of ECB tightening. Nordea sees the two 25bp moves arriving in December and March 2027.

The European Central Bank raised its policy interest rate to 2.50% on Thursday, September 10, its second rate hike this year, in a bid to curb inflation pressures that have resurfaced on energy prices. ECB President Christine Lagarde said the decision was a straightforward one and warned that inflation may take longer than previously estimated to return to the 2% target, which the ECB currently expects to happen in late 2027. Markets increased their bets that the ECB will raise rates more than three times over the next 12 months, up from expectations of two to three hikes before the meeting. Sources close to the discussions said further tightening could be considered as early as the October 29 meeting. Economists at Commerzbank and AFS both revised their forecasts to expect another 0.25% rate hike in December, while Nordea kept its baseline projection that the ECB will raise rates twice more, by 0.25% each time, with the first in December and the second in March 2027.