Brown: ECB will hike rates to 1.5% by end of this year

The European Central Bank is likely to hike interest rates just 25bp to 1.5% by the end of the year, as core inflation remains steady and has barely increased, said Alan Brown at Schroders.

The firm’s CIO said he expects the rise in Europe’s interest rates to be limited this year as he believes the growth picture will soften through the course of the year, not only for peripheral countries but also for the larger countries such as Germany. “But we also notice core inflation has not really budged at all in Europe and the rise in headline inflation is all to do with rising energy and commodity prices,” he said. “So we think what the ECB is doing here is sending a signal it is not going to let inflation expectations rise, although we are actually expecting headline infl...