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The European Central Bank (ECB) will be even more aggressive in its tightening of monetary policy, raising its key interest rate by another 50 basis points (0.5 percentage point) at its upcoming meeting on February 2 as it continues its battle against rampant inflation.

This is according to a Reuters survey conducted among 59 economists between January 13 and 20.

Although the ECB is raising interest rates at the fastest pace in its history, it has so far failed to reduce inflation to its 2 percent target.

Prices rose 9.2 percent in December from the same month a year earlier, official data released last week showed.

Of the 59 economists surveyed, 55 indicated that they expect the ECB to raise interest rates by 50 basis points (0.5 percentage points) on February 2, so that the interest rate on deposits reaches 2.5 percent.

Experts then expect the central bank to add another 25 basis points (0.25 percentage point) to rates next quarter before pausing hikes, taking the key refinancing rate to 3.25 percent, the highest ever its level since the end of 2008.

In a December survey, experts expected the key rate to reach 2.5 percent at the end of March, after which the ECB would add another 25 basis points to 2.75 percent, a level to hold for some time.

More than two-thirds of respondents, or 23 out of 33 economists polled, said the bank was more likely to hold off on rate hikes once they hit a level higher than currently forecast than at lower level.

The interest rate on refinancing operations is expected to rise by 50 basis points (0.5 percentage point) to 3 percent at the upcoming ECB Governing Council meeting, as well as to reach a maximum level of 3.5 percent in March.

The US Federal Reserve (Fed), which began raising interest rates well before the ECB, is expected to end its tightening cycle after raising interest rates by 25 basis points (0.25 percentage points) on each of its next two meetings.

After that, it is expected to keep interest rates steady at least through the rest of 2023, a recent Reuters poll showed.

Inflation has already peaked in the eurozone, the survey also found, and will continue to decline, although it is unlikely to reach the ECB's 2 percent target by 2025. Inflation is expected to average 6 percent this year, and to drop to 2.5 percent in 2024.

A mild winter, falling gas prices and the latest positive economic data led to an improvement in some quarterly growth forecasts in the December survey.

While the eurozone was previously forecast to fall into a technical recession, with the economy shrinking by 0.2 percent in the fourth quarter of 2022 and by 0.3 percent in the current quarter, experts now forecast next quarter (April- July) the economy to expand by 0.1 percent, and in the following third and fourth quarters to grow by 0.3 percent each.

In Serbia, the interest rate jumped

All but one of the economists polled said it was more likely that the economic downturn in the euro zone would be less than they expected.

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