ECB Likely to Hike Rates in 2027, BNP Paribas Says

Watch ECB Likely to Hike Rates in 2027, BNP Paribas Says - Bloomberg on Dailymotion

Transcript

00:00I keep on hearing ECB officials saying like, you know, interest rates are fine where they are.

00:04It doesn't give us a great kind of indication of where they think they will go.

00:08And it's also things move all the time.

00:10So for me, it's a rather odd statement saying rates are where they need to be now.

00:15I see what you mean.

00:17We agree that rates are in a good place right now.

00:20The key point that I'd make is we think the next move from the ECB will be a hike, not a cut.

00:24That's quite different to market pricing.

00:26Everybody sit down.

00:27The hike isn't going to come quickly.

00:30We think it's a 2027 story.

00:32But the key here I'd make is European growth next year can surprise materially on the upside.

00:37The market's expecting growth of about 1%.

00:39We think it will be 1.5%.

00:41And the key driver here is German fiscal expectations.

00:45The market still remains very skeptical that we're going to see the amount of fiscal delivered,

00:51that the fiscal is going to be delivered on time and that it's going to be effective when it is delivered.

00:56We think some of those concerns are fair, but overall the pitch is more positive than perceived.

01:01So stronger German growth can drive stronger European growth and in turn an ECB hike.