JPMorgan and BNP Paribas expect the European Central Bank (ECB) to raise interest rates by an additional 25 basis points in December. They see persistent inflation risks and elevated energy prices as justifying further tightening. Both financial institutions had previously expected the ECB's tightening cycle to end without a December hike, but now reflect the region's resilient growth and ongoing energy supply concerns, indicating that interest rates will stay higher for longer than previously assumed. In a report, BNP Paribas analysts noted, "Given the persistence of the energy shock and resilient economy, we believe the risk of second-round effects materializing is increasing." According to LSEG data, the market assigns a 99.2% probability that the ECB will implement a 25 basis point rate hike at its September 10 meeting. JPMorgan cited "more persistent energy price pressures, robust growth, sticky core inflation, and the gradual rise in the neutral rate as perceived by the ECB" as reasons for the additional December hike. BNP Paribas expects the ECB to hike by 25 basis points at next week's meeting and leaves significant room for further hikes if evidence of second-round effects accumulates.
BNP Paribas SABNP Paribas expects an additional ECB December hike, a macro forecast with no clear directional impact on the bank.
JPMorgan Chase & CoJPMorgan forecasts an extra ECB December hike, a macro call that is not clearly positive or negative for the bank itself.
