European Central Bank Signals More Rate Hikes – Deutsche Bank

European Central Bank policymakers are expected to maintain a hawkish stance as inflation across the eurozone remains persistently above target, according to analysis from Deutsche Bank. The bank notes that underlying price pressures—particularly in services and wages—continue to show resilience despite earlier monetary tightening, suggesting that inflation is becoming more entrenched rather than easing quickly.

As a result, the ECB is likely to keep interest rates elevated for longer and could implement additional rate hikes if inflation fails to show a sustained decline toward its 2% target. Deutsche Bank emphasizes that recent economic data, including firm labor markets and steady consumer demand in parts of the euro area, give the central bank room to continue tightening without immediately risking a sharp downturn.

Furthermore, policymakers are expected to remain data-dependent, closely monitoring inflation dynamics, wage growth, and energy prices, all of which could influence the pace and extent of future rate increases. Overall, the outlook points to a prolonged period of restrictive monetary policy in the eurozone, reinforcing expectations that borrowing costs will stay higher for longer as the ECB prioritizes price stability over near-term growth concerns.