Bank of America Predicts ECB to Raise Rates by 25 Basis Points in December as Energy Shock Drives Inflation Higher
nashnova research
Bank of America expects the ECB to raise rates by 25 basis points in December, arguing that surging energy prices will keep eurozone inflation above target — markets already price a 93% probability of the move, pushing the peak-rate timeline further out.
Why is BofA betting on a December hike?
Natural gas and oil prices are both climbing, compounded by geopolitical tensions — the Iran conflict remains unresolved — tightening energy supply ahead of winter peak demand.
This means → the energy-cost fire is still burning, and inflation will stay above the ECB's target for longer than hoped.
In plain terms = heating season hasn't even started, yet fuel prices are already rising; the ECB can no longer wait for inflation to cool on its own.
The economy looks decent — why is BofA still cautious?
BofA remains guarded on H1 2026 growth, noting that volatile data make it hard to judge whether the recovery can last.
The report states: "Growth may look okay, but it may not be as solid as it currently appears — we doubt there will be meaningful second-round effects."
This reflects a core tension: headline numbers look fine, but BofA sees weak underlying momentum — the upturn may be a short-lived bounce, not a durable recovery.
Could the ECB move early in October?
BofA says an October hike is still possible, but only if inflation data come in significantly above expectations — a high bar.
Market pricing aligns with BofA's call: LSEG data show traders price a December hike at roughly 93%.
In plain terms = October is the backup plan; unless inflation readings spike, the most likely date is December.
Is the Bank of England following suit?
On the same day, BofA added a new forecast: the BoE will hike once in November this year, with a follow-up expected in February 2027.
The ECB has already hiked in step with the Fed, the Bank of Japan, and other major central banks this month.
This means → major central banks worldwide are still in a synchronized tightening cycle — Europe is not an outlier. Whether energy prices ease before winter will determine if hikes need to continue beyond December.
市场有风险，内容仅供研究参考，不构成投资建议。