By Siddarth s
(Reuters) -Goldman Sachs and BNP Paribas abandoned their forecasts for a drop in the September rate by the European Central Bank, now expecting the ECB to have stable rates.
“We believe that the cycle (rate reduction) is completed, and the next decision is an increase, in the fourth quarter of 2026,” said BNP in a note dated July 24 and indicated a resilient economy and growing hopes of an EU-US tariff agreement.
On Thursday, the ECB has held the policy rates unchanged to 2% after having reduced interest rates eight times since June 2024.
“We are in this waiting situation,” said the president of the ECB, Christine Lagarde, to a press conference, adding that the economy was now in a “good place”.
Lagarde’s comments suggest “that the board of directors will probably hold rates unless the prospects are deteriorating materially,” analysts of Goldman Sachs wrote.
Some analysts have interpreted the remarks of the head of the ECB as somewhat Bellifiennes.
HSBC has also reiterated its position that the ECB is made reduction rates, while JP Morgan pushed its price forecasts to October from a previous September wait.
The result of the EU-US trade talks remains uncertain, but two diplomats with internal information told Reuters that an agreement which included a wide price of 15% on EU goods was likely.
Earlier this month, Trump had threatened to impose prices of 30% on EU imports from August 1.
Other brokerage houses, including Morgan Stanley and UBS, also pointed out an increasing uncertainty around a September move.
“The risks of this opinion (a drop in rate in September) have clearly increased,” said Morgan Stanley analysts in a note. “In the event that the data had to be stronger than what we expected, we think that the ECB could extend the current socket in December.”
(Report by Siddarth S and Akriti Shah in Bengali; edition by Ronojoy Mazumdar)
