Deutsche Bank expects the ECB to hike at its September meeting and to add a
further 25bp in December, citing persistent energy-related upside risks to
inflation. The bank says its prior view that the deposit facility rate would
peak at 2.5% (current 2.25%) is under challenge and now judges a 2.75% terminal
rate more likely. It adds that quicker easing of geopolitical tensions,
including the Iran conflict, or weaker growth could keep the peak at 2.5%;
absent broader inflationary pressures there is no basis to expect rates above
3%. The ECB decision is due Sept. 10, when markets widely expect a hike.
