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Deutsche Bank predicts two Euro rate hikes in 2026
Deutsche Bank expects the European Central Bank to raise interest rates twice during 2026, including a 25 basis point increase in December, due to ongoing risks from rising energy prices and their impact on inflation. Previous forecasts indicated that the core rate would settle around 2.5%, but it is now more likely to reach 2.75%, with a possibility of exceeding 3% only if there are signs of higher inflation. The bank faces a challenge in balancing efforts to contain energy-related inflation while avoiding restrictions on economic growth, especially since the labor market currently shows no strong signs of a wage-price spiral. This comes amid rising expectations of interest rate hikes at the September meeting, amid reports of a robust labor market in the region.
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