Brussels, Belgium – A recent Bloomberg survey reveals a dramatic shift in monetary policy expectations for the Eurozone. Analysts now predict that the European Central Bank (ECB) will raise interest rates twice this year. This shift is primarily driven by runaway inflation, exacerbated by the fallout from the Iran war and subsequent disruptions to global energy supply chains.
Interest rate forecast: June and September
According to the results of a survey conducted between May 4 and 7, economists expect the European Central Bank to implement two consecutive interest rate hikes of a quarter of a percentage point (25 basis points) each.
The first hike is likely to occur in June, followed by a second in September. This aligns more closely with the expectations of financial markets, which have already begun pricing in at least two quarters of monetary policy before the end of the year.
According to the results of a survey conducted between May 4 and 7, economists expect the European Central Bank to implement two consecutive interest rate hikes of a quarter of a percentage point (25 basis points) each.The first hike is likely to occur in June, followed by a second in September. This aligns more closely with the expectations of financial markets, which have already begun pricing in at least two quarters of monetary policy before the end of the year.
The impact of the Iranian war on inflation
The experts surveyed believe that the war with Iran led to sharp increases in commodity prices, particularly oil and gas. This also resulted in inflationary pressures spreading from the energy sector to other goods and services.
This “imported inflation” has forced monetary policymakers in Frankfurt to take action to protect the single currency and prevent the erosion of the purchasing power of EU citizens.
Challenges facing the European Central Bank
While the European Central Bank seeks to curb inflation by raising interest rates, some analysts fear this move could slow economic growth in countries in the region already struggling with high living costs.
However, the top priority now appears to be controlling prices, which have reached record highs due to the military conflict. This makes 2026 a crucial year for the future of European monetary policy, given the most complex geopolitical circumstances in decades.
