May 30, 2018 / 9:54 AM / 4 months ago

Nomura pushes back forecasts for ECB rate hike to Sept 2019

LONDON (Reuters) - Japanese investment bank Nomura said on Wednesday it had pushed back its forecast for the timing of a European Central Bank interest rate hike to September 2019 from March 2019 previously.

FILE PHOTO: European Union flags flutter outside the European Central Bank (ECB) headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo

Signs of slowing economic growth in the single-currency bloc and a political crisis in Italy have prompted investors to cut bets on an ECB rate hike over the next year.

Nomura told clients in a note it also expected the ECB to announce a three-month wind-down of its asset purchase programme from October through to December 2018 at its July meeting. The bank had previously expected a shorter two-month wind-down.

The ECB’s current asset-purchase scheme is scheduled to end in September.

“We think it more probable too that recent financial instability and slower growth could encourage the ECB to become more explicit in its forward guidance, possibly by suggesting what it means by its current statement that interest rate hikes will not emerge until “well past the horizon of the net asset purchases,” Nomura analysts said in the note.

Reporting by Dhara Ranasinghe; editing by Sujata Rao

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