JP Morgan sees a recession coming to Europe as a looming gas crunch and Italy’s political upheaval will pressure economic activity in the region. That said, the firm sees just a mild recession in the works but that would be enough to limit the ECB’s tightening cycle.

They are forecasting Eurozone GDP growth to slow to 0.5% in Q3 before contracting by 0.5% in both Q4 this year and Q1 next year. As for their ECB outlook, they say that:

„We expect the ECB to deliver another 50 bps of hikes by year-end. We now expect 25 bps in September and 25 bps in October.“

The firm previously called for 75 bps more worth of rate hikes by the ECB with a 25 bps rate hike penciled for December.

This article was written by Justin Low at www.forexlive.com.