According to poll results from Reuters, the European Central Bank (ECB) is seen holding off even further from rate hikes, with newed evidence of economic recession expected to keep the ECB pushed back.
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Reuters polls since June 2018 have predicted that after ending its asset-purchase program in December, the ECB would follow with a rate rise in the third quarter of 2019, in line with the ECB’s guidance.
But a barrage of weak data – including news that Europe’s top economy, Germany, barely skirted a recession in the second half of last year – suggests growth has slowed, persuading economists to push forward that long-held forecast.
They also slashed their growth outlook for Germany, France and Italy compared with an October poll.
The ECB is now expected to raise its deposit rate, currently at -0.40 percent, to -0.20 percent in the fourth quarter and wait until early 2020 to raise its refinancing rate from zero to 0.20 percent.
More than a third of economists polled gave a 40 percent chance or more of a recession. And on a like-for-like basis, out of 36 common contributors in January and December, nearly two-thirds raised their two-year recession probability. Ten kept it at the same level. Only three lowered it.
The chance of a recession this year also rose to 25 percent from 20 percent in December.
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