Commerzbank: ECB rates forecast

Strategists at Commerzbank think that the ECB will lift up the rates 2 times more – in September and in December. In addition, by the middle of the year the European policymakers may also change the allotment modes that may also be regarded as a tightening move.

The specialists think that the peripheral nations won’t be affected much by the rate increase, at least in the long term. According to the bank, looking at Portuguese or Spanish sovereign 5- or 10-year bond yields it’s possible to see that the real ECB interest rate expectations component of these yields is rather small as they are determined primarily by the sovereign credit risk.

However, the economists expect that in the longer term divergence trend in the euro area will intensify.

Chart. Daily EUR/USD