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The European Central Bank will likely slow the pace of interest-rate hikes later this year, Goldman Sachs Group Inc. estimates, basing its call on recent comments from policy makers.

Economists led by Jari Stehn now expect a 50 basis-point increase in December, versus their earlier prediction for 75 basis points, they said in an Oct. 14 report. They also see a 75 basis point rise later this month, which would be the second in a row.

“Recent ECB commentary suggests that several Council members prefer to step down the pace of hiking at the end of the year, as the deposit rate moves into neutral territory, the economy starts to contract and the Fed is expected to slow the pace of tightening,” the economists said. 

Still, the bank kept its call for a terminal rate at 2.75% in March 2023. The economists also expect the Governing Council to decide in the first three months of the year to start reducing the size of its balance sheet at the beginning of the second quarter. 

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