The ECB Won't Hike In 2026
Front-end pricing has overshot.
Last week, we addressed the sharp move at the short end of the curve for several G10 nations, triggered by inflationary concerns stemming from the spike in energy prices.
With prices still elevated and the promise from President Trump of a quick win not yet materialising, more chatter is out there that the nations most sensitive to an inflationary shock will be forced to look towards interest rate hikes.
One of the most spoken of is the European Central Bank (ECB), where GC member Muller said today the chances of the next change in policy rate is more towards an increase than a decrease.
Yet does it really make sense to price for an ECB hike as we currently stand?