ECB to hold rates unchanged at least until December 2020

Deutsche Bank economists predict that the European Central Bank will wait with the rise in the base rate until December 2020, as euro area growth continues to fall rapidly.

Decreasing external demand has begun to affect spending within the area, economists from the largest lender in Germany commented. In the past, they predicted that interest rates would be raised in March 2020. Markets bet that interest will be raised by 10 basis points in June next year.

Bankers have to answer the question whether the current delays in the conditions are temporary or not, following unexpectedly weak macroeconomic indicators that raised concerns about the prospect of the economy. The many risks, including a bad deal on Brexit or the escalation of the trade war, could put the economy in recession if they materialize.

Less than two weeks ago, Deutsche bankers emphasized the possibility of a single raise
deposit rates, which are currently negative and are considered the main culprit for the Bank's poor profitability. This observation came after ECB President Mario Draghi said in December that this is a short-cut issue. Economists commented that his tone at the last press conference was more balanced.

Source: Bloomberg Finance L.P.

Original Post: May May Delay First Rate Hike to Late 2020, Deutsche Bank Says

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