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Central BanksMedium•27 March 2026•

1 min read

ING Challenges Market Bets on ECB and BoE Rate Hikes Amid Energy Price Focus

Key Facts

1Markets expect three rate hikes from the ECB and Bank of England, while ING expects none.

2Analyst James Smith argues that energy prices, rather than general data dependence, will be the true decider for central bank actions.

A significant gap has emerged between market expectations and analyst forecasts regarding interest rate paths in Europe and the UK. While markets are currently pricing in three additional rate hikes from the European Central Bank (ECB) and the Bank of England (BoE), ING analysts project a complete pause in tightening. Analyst James Smith argues that energy prices, rather than broad economic data, will be the primary catalyst for future policy decisions. This divergence suggests that investors might be overestimating central banks' "data dependence" by ignoring the cooling effect of energy costs on inflation trajectories. Consequently, the mismatch between market pricing and actual policy could trigger heightened volatility in the EUR/USD and GBP/USD currency pairs. Fixed-income markets are also expected to face adjustments as the impact of energy price trends becomes clearer to investors.

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