BofA sees ECB rate hike in December as energy prices fan inflation
TLT•BofA Global Research expects the European Central Bank to raise rates by 25 basis points in December, citing an energy shock that could keep euro zone inflation above target longer. Traders are pricing in about a 93% chance of a December increase.
1. BofA’s rate outlook
BofA Global Research expects the ECB to raise interest rates by 25 basis points in December, saying renewed energy price pressures could keep euro zone inflation above the central bank’s target for longer.
2. Energy and inflation risks
Rising gas and oil prices, geopolitical tensions and limited signs of a breakthrough in the Iran conflict could keep energy markets tight through the winter peak-demand season. BofA said an October rate increase remained possible but would likely require significantly higher inflation data.
3. Market pricing
Traders are pricing in roughly a 93% chance of a December rate increase. BofA also said it was cautious about stronger-than-expected growth in the first half of 2026, citing data volatility.
