EKT: How much will it raise interest rates on May 4?

When will the brakes be put on the tightening of monetary policy?

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The European Central Bank will almost certainly add 25 basis points to its deposit rate on May 4 and then raise it to 3,50 percent or higher in June as core inflation remains stubbornly high, according to economists polled by Reuters.

Eurozone headline inflation eased further last month but remained three times above the ECB's 2% target.

ECB President Christine Lagarde said last week that the central bank "still has a way to go" with monetary policy, so debate over the pace and how much further to the top deposit rate remains.

The central bank is expected to raise interest rates for a seventh straight meeting next week, but will retreat in a move of 25 basis points, according to 57 of 69 economists in the latest Reuters poll.

If carried out, this would take the deposit rate to 3,25%, in line with market expectations.

The ECB has raised interest rates by 50 basis points at each of the past six meetings, but some policymakers remain cautious as previous hikes have yet to be fully absorbed into the economy.

The hawks
However, 12 respondents expect a move of 50 basis points next week.

"Although headline inflation is easing, pressure on services and stubbornly high structural inflation argue for more rate hikes and a 'higher rate for longer' approach," said Carsten Brzeski at ING.

"The ECB will not consider any reversal of the current stance until both forecast and actual inflation move clearly towards 2% again."

While the ECB opened its monetary policy tightening cycle later than most major central banks, it is now one of the few not quite ready to stop.

The U.S. Federal Reserve is forecast to make a final 25 basis point hike in May and then hold rates steady through 2023. The Bank of England was expected to reach its final rate next month, although higher inflation may to change this view.