ECB Has Lower Hurdle to Hike Policy Rates Beyond 2.5%
Dow Jones
Sep 09
0937 GMT - A resilient economy and robust bank lending has prompted estimates of the eurozone's neutral interest rate--when monetary policy neither restricts nor stimulates economic growth--to edge up over the last couple of years, Goldman Sachs economists Sven Jari Stehn and Alexandre Stott say in a note. "The average of three model estimates we track has increased by 19 basis points since late 2023," they say. That lowers the threshold for the European Central Bank to raise its key interest rate above the 2.5% terminal rate Goldman forecasts, and allows the ECB to sustain rates at a slightly higher level than its 2% long-run forecast, the economists say. Investors expect the ECB on Thursday to raise its policy rate to 2.5% from 2.25%.
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