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

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

Markets are increasingly pricing in a more hawkish European Central Bank as geopolitical tensions, elevated energy costs and depleted gas inventories threaten to keep eurozone inflation high. Investors see a rising probability of further rate hikes through 2027, while resilient economic activity and fading disinflationary forces add to the case for tighter policy.