The International Monetary Fund says the European Central Bank will likely need to raise rates by 25 basis points at least once more in 2026. The IMF says the move would combat high inflation, and that further tightening will likely be needed to bring inflation back to target by 2028.
The IMF said the ECB will likely need to raise interest rates by 25 basis points at least one more time this year to combat high inflation. According to the IMF's regular forecast report for Europe: "at least one further 25 bps increase in policy rates in 2026 will be required".
The ECB has already increased rates by 25 basis points in both June and September to address rising inflation. Investing.com describes that inflation as driven by higher energy prices resulting from the US-Israeli war on Iran.
Beyond 2026, the fund said monetary policy should depend on incoming data. However, it added that further tightening will likely be needed to bring inflation back to target levels by 2028.
The IMF also cautioned that fiscal support measures aimed at offsetting higher energy prices could work against efforts to reduce inflation if not properly designed.
Source: Investing.com
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