UK Markets closed

Deutsche bank lifts forecasts for ECB terminal rate to 3.75%

LONDON (Reuters) - Deutsche Bank has lifted its forecast for where the European Central Bank's key rate will rise to in this tightening cycle to 3.75% from 3.25%, the German bank said in a note on Wednesday.

Deutsche economists now expect the ECB to raise interest rates by 50 basis points (bps) at its March and May meetings, followed by a final hike of 25bp in June. They had previously expected a 50 bps hike in March and a final 25 bps rise in May.

A more resilient economy and jobs market alongside hawkish central bank rhetoric was behind the forecast change, the note said.

The ECB hike rates by 50 bps to 2.5% earlier this month.

(Reporting by Dhara Ranasinghe; Editing by Amanda Cooper)