MILAN, June 1 (Reuters) - Deutsche Bank economists have ramped up expectations over European Central Bank policy tightening and now expect one of the two interest rate hikes in the third quarter to be a 50 basis points hike, more likely in September than July.
"A 50bp hike is not inconsistent with the reaction function presented in President Lagarde’s policy normalisation blog... We believe the ECB is continuing to underestimate inflation and we expect support for a 50bp hike will increase as the summer progresses," they wrote in a note late on Tuesday.
Deutsche Bank's previous baseline scenario was to expect back-to-back 25 basis points hikes from July.
Reporting by Danilo Masoni
Source: Reuters