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The Tell: Nomura forecasts a European Central Bank rate cut — before the ECB has even begun its rate-hike cycle


What goes up, must come down.

In a new post on the global economic outlook, economists at Japanese bank Nomura forecast the European Central Bank will make an interest rate cut next June.

The ECB, it should be pointed, has yet to make a rate hike. ECB officials including President Christine Lagarde say the central bank is planning on lifting rates at its meeting scheduled for July 21, and again by as much as 50 basis points at its Sept. 22 meeting.

The Nomura economists say the ECB will lift rates by 175 basis points through March, in response to record high inflation, but the bank also sees a recession during the second half of this year and the first half of 2023.

The Nomura note comes on a day when the euro

was flirting with parity vs. the U.S. dollar for the first time in two decades.

The Nomura team expect similar movements from other major banks. The Fed will take rates to between 3.5% and 3.75%, but then start cutting in September 2023, and take rates all the way down to 0.875% by the end of 2024.

The Bank of England will make another 100 basis points of hikes this year but cut rates in May and August of 2023, the Nomura team forecasts.

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