ECB is set to raise rates by 0.5% on December 15

The European Central Bank (ECB) is likely to push interest rates higher by 50 basis points next week. A Reuters poll suggested that the hike comes despite the economy sliding into recession.

The regulator’s meeting is scheduled for December 15. Analysts predict that the ECB is going to increase the deposit rate to 2%, being the highest level since 2009. The refinancing rate is also set to move up by 0.5% to 2.5%.

ECB's interest rate decision will be announced right after the U.S. Federal Reserve (Fed) meeting on December 14. Both central banks are expected to cut the pace of rate hikes. Thus, the growth could be 0.5%. Earlier, the Fed conducted four consecutive rate hikes of 75 basis points. 

Carsten Brzeski, head of macroeconomic research at ING Research, said next week's ECB meeting to be one of the few instances where the European regulator will make a decision following the U.S. central bank. But slower rate hikes by the Fed are likely to have an impact on the ECB as well. 

The survey also showed that inflation in Europe will peak at 10.3% in the fourth quarter of 2022. This level is projected to decline thereafter. However, the ECB's target of 2% is not seen until 2025. 

Officials are facing the issue of further monetary tightening as the EU moves into recession. Respondents said that there is an 80% chance of this outcome.