Another ECB hike is no more likely than not

Marketing communication 18 September 2026

Another ECB hike is now more likely than not ECB special

Contents RaboResearch Energy inflation will probably force another hike 1 Two-sided risks, but predominantly to the upside 3 Global Economics & The ECB is not escalating to a forceful response 2 Additional hikes are transitory 4 Markets knowledge.rabobank.com Summary Bas van Geffen, CFA  We forecast an additional ECB hike to 2.75% in December on the back of higher energy price Senior Macro Strategist forecasts.  The ECB has no reason to accelerate its tightening cycle, and we still prefer to fade pricing of Elwin de Groot an October rate hike. Head of Macro Strategy  Risks are more two-sided but remain skewed to the upside. If inflationary pressures intensify and spread beyond energy-related costs, the ECB may need to hike further in 2027.  Conversely, if energy prices ease or economic activity slows more quickly than we anticipate, the ECB could still refrain from a December hike.  However, energy inflation should start to abate in March. This would remove the impetus to hike much further, opposed to market pricing of hikes through mid-2027.  Any hikes from this point on will probably be reversed in the latter part of next year, but a more sluggish core inflation may delay cuts below 2.50% until 2028.

Our new energy price forecasts make another rate hike more likely than not. We now expect the ECB to raise the deposit facility rate by 25bp in December, to 2.75%. This is not a shift to a stronger policy response. So far, the ECB has managed the inflation and growth risks of the energy shock well. They tightened proactively, but not too much. Our new forecast essentially maintains this balance until energy-driven inflation starts to abate.

Energy inflation will probably force another hike Our energy strategists have significantly raised their energy price forecasts. This affects both inflation and economic activity, but the price effects will show more immediately. That tips the balance towards some additional tightening. But we believe that the timing of peak inflation allows the ECB to end the cycle in December.

Figure 1: Energy-driven inflation to peak in Houthi attacks on a Saudi pipeline disrupt a February? key bypass for the Strait of Hormuz. Further supply risks follow from the Houthis taking control of areas around the Bab el-Mandeb strait, which puts new constraints on tanker movements. So, our energy strategists have embedded a more persistent risk premium into their energy price forecasts this week.

These revisions have a significant impact on our inflation forecasts. Based on these higher prices for oil products and natural gas, our inflation models predict 0.5 percentage point Source: Macrobond, RaboResearch stronger headline inflation across this year and next. We now expect inflation to peak at 4.4%

1/8 RaboResearch | Another ECB hike is now more likely than not | 18-09-2026, 11:45 Please note the disclaimer at the end of this document.

y/y in January and February, after which base effects should gradually lessen the impact of energy prices on the inflation rate. This takes our inflation forecasts to 3.1% for 2026 and 3.5% for 2027.

At some point, higher energy prices must start to impact economic activity as well. Our growth forecasts have been more pessimistic than consensus or the ECB since the start of the energy crisis, but the economy has been more resilient than expected. We estimate that our new energy price forecasts have limited additional impact on top of our previous growth estimate.

So, on balance, we believe that this additional energy shock hits inflation harder and earlier than economic activity. So, logically, some further tightening may be required to keep expectations anchored, and to prevent second round effects. We therefore pencil in an additional rate hike in December.

Essentially this is a matter of the ECB “looking busy” until energy price inflation starts to abate. Considering that energy prices should start to abate in March, we believe policymakers won’t need to keep up that appearance for much longer. Thus, we forecast just one additional hike.

Figure 2: Our Taylor rule points to another…