Goldman Sachs released its forecast that expects the European Central Bank to raise interest rates three times this year, bringing the terminal rate to 3.5% from 3.25% previously estimated.
In today's note, Goldman Sachs said that in addition to a 50 basis point increase in March and a 25 basis point increase in May, it estimates a 25 basis point increase in June.
Goldman's expected change came after hawkish comments from ECB board member Isabel Schnabel and French central bank chief Francois Villeroy de Galhau, two influential policymakers of the 26-member Governing Council, on Friday.
Markets currently see ECB rates peaking at around 3.7% by the end of the summer.
On the other hand, strong growth in services meant that the recovery in eurozone business activity picked up this month, growing faster than expected.
The S&P Global Composite Purchasing Managers' Index (PMI) for the 20 countries that use the euro, seen as a good gauge of the bloc's overall economic health, rose to a nine-month high of 52.3 in February from 50.3 in January.
That was comfortably above the 50 level that separates growth from contraction and above all forecasts in a Reuters poll that predicted a more modest rise to 50.6.
Signs of easing price pressures may be welcomed by policymakers at the European Central Bank who are aggressively raising borrowing costs in an effort to rein in inflation that is running well above its target.
A Reuters poll last week found the ECB would raise its deposit rate at least twice more, bringing it to a terminal rate of 3.25% next quarter.
