Markets brace for more hawkish ECB as energy risks threaten to keep inflation elevated

Markets are preparing for a more aggressive stance from the European Central Bank as concerns about energy costs and supplies continue to weigh on inflation. This hawkish shift is driven by the persistence of high energy prices, which are expected to keep eurozone inflation elevated. The potential for further rate hikes through 2027 is increasing, which could have significant implications for the economy and trade, particularly if other central banks follow suit with similar policies.

Why it matters

The European Central Bank is expected to take a more hawkish stance due to elevated energy costs and geopolitical tensions. This could lead to higher interest rates and a stronger euro, which may hurt the economy and markets.

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