Apobank Expects ECB to Raise Deposit Rate to 2.5% After Two 25-Basis-Point Hikes

An Apobank economist said the European Central Bank is expected to raise interest rates by 25 basis points this week and again in September, which would lift the deposit rate to 2.5%. According to Jin10, Apobank economist Bjorn Ohl wrote in a report that the inflation outlook in the euro area has worsened noticeably since March, citing the Iran war and higher energy prices. Apobank expects the two rate increases this year to be reversed later, with the deposit rate cut in two steps from 2.5% to 2% in the first half of 2027. The report said this view is based on expectations that the U.S.-Iran conflict will be resolved by then, while economic growth slows and inflation returns to the 2% target.