Danske Bank has revised its outlook for European monetary policy, forecasting that the European Central Bank will raise interest rates at its September meeting.
The bank’s assessment stands in contrast to the prevailing market consensus, which currently prices in a hold at the upcoming July 23 policy decision.
This policy view aligns with Danske Bank’s recent financial performance, where the lender reported a second-quarter net profit of DKK 6.
According to Danske Bank, rates must rise further to ensure price stability before any easing cycle can commence, with the first rate cuts expected in 2027.
The lender outlined four key drivers supporting this trajectory, emphasizing that inflationary pressures remain more entrenched than many market participants anticipate.
This hawkish stance suggests that the ECB’s restrictive policy will persist longer than currently priced, potentially keeping borrowing costs elevated for businesses and consumers across the eurozone well into next year.
This policy view aligns with Danske Bank’s recent financial performance, where the lender reported a second-quarter net profit of DKK 6.2 billion, surpassing analyst consensus estimates.