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ECB Will Limit Interest-Rate Hikes to This Year Only, HSBC Says

The European Central Bank headquarters in Frankfurt.

The European Central Bank headquarters in Frankfurt.

Photographer: Alex Kraus/Bloomberg

The European Central Bank will stop hiking interest rates after the end of 2022, when a euro-area recession and easing price pressures will restrain monetary-policy tightening, according to HSBC.

Cuts to Russian natural gas supplies and resulting surges in energy costs will drive inflation higher than previously expected, to a peak of 10% in October, HSBC economists led by Simon Wells said Friday in a report to clients. The squeeze on household incomes will make a recession “probably unavoidable.”