Banks see more ECB hikes
Geopolitical shock from the Middle East and higher energy costs have pushed central banks toward a hawkish stance — the ECB held rates at 2% this week but major banks now expect up to three ECB hikes in 2026, while the Fed remains cautious about cuts if oil keeps inflation elevated. Markets are dialing back bets on near‑term easing, the dollar is under pressure, and Russia went the other way with a 15% rate cut as growth slows — all signaling investors should price the risk of higher‑for‑longer rates. (cnbc.com) (investing.com) (reuters.com) (english.aawsat.com)
Barclays and J.P. Morgan are modelling three 25‑basis‑point ECB moves in April, June and July that would push the deposit rate toward about 2.75% by year‑end, while Morgan Stanley’s base case calls for 25bp hikes in June and September taking the deposit rate to roughly 2.5%. (cnbc.com) Interest‑rate swaps now imply roughly a 70% probability of two 25bp ECB hikes this year and a first hike fully priced by July, according to trader pricing tracked by Bloomberg. (bloomberg.com) ECB staff updated projections show headline inflation now expected to average 2.6% in 2026 and inflation excluding energy and food about 2.3% that year, with the staff projections’ data cut‑off extended to March 11. (nbb.be) Federal Reserve Governor Christopher Waller said he is cautious about how surging oil prices will affect inflation and signalled he may favour patience on cuts, per Bloomberg’s reporting of his March 20 remarks. (bloomberg.com) A CNBC Fed survey of 32 fund managers, analysts and economists put the six‑month forward oil price at about $88 a barrel and lifted the panel’s 12‑month recession probability to 31%. (cnbc.com) Investors shifted market bets after central bankers warned the Middle East conflict could stoke inflation, with Reuters reporting market pricing moved from a long hold to an expectation of an ECB hike as soon as June. (reuters.com) The Bank of Russia lowered its key rate by 50 basis points to 15.00% on March 20, 2026, citing a slowdown in price growth in February, according to the central bank’s statement. (cbr.ru)
