(Reuters) -Economists at UBS expect the benchmark interest rate in the eurozone to peak at 3.75%, while Societe Generale sees it at 4% after the European Central Bank (ECB) signalled more tightening ahead.
The central bank slowed the pace of rate increases on Thursday by delivering a quarter percentage point hike, raising the terminal rate to 3.25%.
However, UBS expects a pause after July as it sees inflation declining slowly over the summer.
Goldman Sachs and Bank of America also expect the rate to peak at 3.75%, although BofA sees a “significantly” higher chance of rates hitting 4%.
Societe Generale expects three more hikes as it sees the eurozone’s core inflation staying elevated without showing convincing signs of weakening until September.
The ECB euro short-term rate (ESTR) September 2023 forward was around 3.6%, implying an ECB deposit rate peak of 3.7% by this summer.
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(Reporting by Aniruddha Ghosh and Susan Mathew in Bengaluru; Editing by Rashmi Aich and Anil D’Silva)