BofA expects ECB to raise rates by 0.25% in December as energy costs prolong inflation

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Summary · why it matters

BofA Global Research expects the European Central Bank to raise interest rates by 0.25% in December. It said another surge in energy prices will keep euro-area inflation above the ECB's target for an extended period. This month the ECB joined other major central banks, including the US Federal Reserve and the Bank of Japan, in raising rates to contain inflation risks. In a report dated the 23rd, BofA said it remains cautious about above-forecast growth in the first half of 2026, noting that growth may continue to look resilient but will not be as strong as it is now. According to BofA, a rate hike in October is still possible, but it would likely require significantly stronger inflation readings to materialize. Financial markets broadly align with BofA's outlook, and LSEG data show traders pricing in about a 93% probability of a December rate hike. The firm also revised its outlook for the Bank of England, expecting a rate hike in November 2026 and another increase in February 2027.

Impact on assets 3

Financials▲ · 1 stocks
Bank of America Corp
BAC
± MixedMonetaryrelevance

BofA's own research forecast on ECB/BoE rate hikes; no direct impact on Bank of America's business.

Others▲ · 2 stocks
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