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2026 Economic Projections
Expected inflation and growth outlook for the Eurozone in 2026.
Primary Sources
JP Morgan Shifts ECB Rate Hike Expectations to June and September 2026
JP Morgan's new forecast for ECB rate hikes pushes large cuts off the table, indicating a shift in monetary policy approach. JP Morgan has adjusted its forecast, now predicting that the ECB will increase interest rates by 25 basis points in June and September of 2026. This change replaces earlier expectations of increases in April and July 2026. Additionally, data from the Polymarket indicates that the likelihood of a 50-plus basis points rate decrease occurring during the April 2026 meeting is minimal, sitting at just 0.1%.#What is the Market's Reaction?traders currently show little interest in anticipating a surprise rate cut. The current market rate for a 50-plus basis points decrease in April is stagnant at the 0.1% level. While daily trading volume stands at $3,767, actual transaction volume in USDC is only $2. The market is quite thin, with just $36 needed to alter the odds by 5 percentage points.#Why is This Adjustment Significant?This revised forecast significantly undermines the possibility of a large rate cut in April. JP Morgan's view aligns with the ECB's cautious approach to inflation management. The anticipation of hikes in June and September signifies a controlled tightening policy, steering away from any abrupt changes in April.#What Should Investors Monitor?The nearly static odds of a rate cut signal a lack of trader confidence in a short-term pivot by the ECB. With a 0.1% chance for a YES share, the potential for a tenfold return demands an unrealistic assumption that the ECB will dramatically alter its course within the next two weeks. Investors should pay close attention to remarks from ECB President Christine Lagarde, as well as any fluctuations in eurozone inflation metrics leading up to the April 30 meeting, though current pricing does not indicate an expectation of significant movement in these factors. Important Notice And Disclaimer This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.
ECB: Higher inflation and more rate hikes - Deutsche Bank
Deutsche Bank economists note the European Central Bank (ECB) kept rates unchanged in March but now expects two 25 bp hikes in June and September, already fully priced by markets. The deposit rate sits at 2.0%, seen as neutral. Eurozone inflation is projected at 2.8% in 2026, with growth for 2026 cut to 0.5% as energy prices and weak data weigh.ECB seen hiking twice into 2026 slowdown"As expected, key interest rates remained unchanged in March.""Given the energy price shock and materializing economic risks, the ECB is increasingly finding itself in a difficult position, but it is likely to have learned its lessons from the inflation shock of 2022.""Against this backdrop, we have adjusted our key interest rate forecast and now expect two rate hikes of 25 basis points (bp) each in June and September.""Currently, around 66 bp are priced in by the end of the year, which corresponds to an implied probability of 64% for a third rate hike.""In our baseline scenario, we have, among other things, lowered our growth forecast for 2026 from 1.1% to 0.5%. German fiscal policy could have a stabilizing effect on the entire eurozone. We expect an inflation rate of 2.8% for 2026."(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
ECB: Christine Lagarde Ready to Act, Ruling Out Rate Hike
The International Monetary Fund has forecast inflation in the eurozone at 2.6%, warning that a prolonged crisis could push it up to 4.2% or even 6%. ECB Vice President Luis de Guindos also noted that decisions on raising interest rates will depend on the impact that rising energy prices will have on the region's economy.
JP Morgan revises ECB rate hike forecast to June and September 2026
JP Morgan revised its ECB rate hike forecast to June and September 2026. Rate cut of 50 bps in April 2026 at 0.1% YES.
