ECB may hike rates in December

The article discusses the European Central Bank's expectations regarding the interest rate path for 2026. It is anticipated that the bank will raise the interest rate by 25 basis points next December, reaching 2.75%, and then keep it stable until May 2028. This comes amid rising inflation in the Eurozone, which has reached 3.8%, driven by energy prices, with no current signs of this inflation spreading to wages and broader prices. The forecasts reflect a divergence between economists and markets, with markets expecting further rate hikes next year, while some officials believe the bank might only need one increase before pausing, especially given the rise in European bond yields and their impact on financial conditions. Despite concerns about higher borrowing costs and their effects on economic growth, most analysts expect the bank's intervention to be limited to a more cautious policy approach, focusing on avoiding the entrenchment of inflation or a debt crisis in the region.

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