J.P. Morgan forecasts December ECB rate hike, citing sticky inflation

J.P. Morgan and BNP Paribas revised their European Central Bank (ECB) outlook on September 4th.

Both brokerages now forecast an additional 25-basis-point interest rate hike in December. This update reverses previous expectations that the ECB tightening cycle would end before year-end.

J.P. Morgan attributes the shift to persistent energy price pressures and solid regional economic growth. Sticky core inflation also drives the expectation for prolonged higher borrowing costs.

Financial markets have already priced in a separate 25-basis-point hike for the upcoming September meeting.