Investing.com-- Investors may be pricing in too much tightening from the European Central Bank, Capital Economics analysts said, arguing that a temporary inflation spike caused by higher energy prices is unlikely to generate the persistent wage pressures needed to keep interest rates high. Capital Economics expects the ECB to raise its deposit rate again in December, taking it to 2.75% from 2.5%, but sees little need for further tightening after that. The research firm expects rate cuts to return to the agenda in the second half of 2027, with the deposit rate eventually falling to 2% in 2028.
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