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Deutsche Bank: ECB to Increase Rates Two More Times in 2026 Amid Ongoing Energy Pressures, 'Resilient' Growth

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Deutsche Bank Research expects the European Central Bank to deliver two more rate hikes in 2026 amid persistent energy inflation from the Middle East conflict and "resilient" growth in the region supported by defense and artificial intelligence spending.

The research firm said in a Sept. 4 preview note that it expects the ECB to raise its deposit rate to 2.50% at the September meeting on Thursday, with a further 25-basis-point hike to 2.75% in December.

Analysts noted that while economic growth has resisted energy supply shocks, geopolitical risks and gas replenishment continue to push fuel expenses higher. As elevated energy costs take time to filter through the economy, Deutsche Bank increased its headline 2027 inflation forecast to 2.7% from 2.5%. The research firm also boosted its expectations for ECB staff projections by 0.4 percentage points to 2.7% in 2027 and by 0.1 percentage point to 2.1% in 2028.

"The outlook remains highly contingent and there are two-sided risks to 2.75%. We cannot rule out a 2.50% peak if there is rapid geopolitical resolution, materially lower gas prices, weaker growth, the absence of indirect inflation effects and a tightening in credit," the note said.

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