Finance
J.P. Morgan Sees ECB Hiking Rates in April, July on Rising Inflation Risks
Published by Global Banking & Finance Review®
Posted on March 20, 2026
1 min readLast updated: March 20, 2026
Quick Summary
J.P. Morgan now expects the ECB to hike interest rates in April and July in response to heightened inflation risks stemming from the Iran war and surging energy prices, a notable shift from its prior outlook of unchanged rates through 2026.
ECB to start lifting rates as soon as April on inflation pressures, brokerages say
Brokerages Revise ECB Rate Hike Forecasts Amid Inflation Concerns
Major Banks Update Interest Rate Predictions
March 20 (Reuters) - J.P. Morgan, Morgan Stanley and Barclays expect the European Central Bank to hike interest rates in 2026, a sharp shift from their previous forecasts for rates to remain on hold, as policymakers flagged rising inflation risks from the Middle East war.
Expected Timeline for Rate Hikes
Barclays and J.P. Morgan expect a rate hike in the ECB's April policy meeting, followed by further increases in June and July.
Morgan Stanley's Projections
Morgan Stanley expects 25-basis-point hikes each in June and September.
Factors Driving the Shift in Policy Outlook
The sudden shift comes after the ECB kept its key interest rate steady at 2% on Thursday, but policymakers expect to discuss hikes in the coming months as the Iran war threatens to push up inflation in the euro zone.
Reporting Credits
(Reporting by Siddarth S in Bengaluru; Editing by Sonia Cheema)
Key Takeaways
- •J.P. Morgan forecasts two ECB rate hikes—in April and July—citing rising inflation risks linked to the Iran conflict and higher energy costs.
- •This marks a sharp reversal from J.P. Morgan’s earlier projection of stable interest rates throughout 2026.
- •The ECB held rates at 2% on March 19, but acknowledged that war-driven energy shocks elevate inflation uncertainty and could prompt policy tightening.
Frequently Asked Questions about J.P. Morgan sees ECB hiking rates in April, July on rising inflation risks
1Why is J.P. Morgan expecting the ECB to hike rates?
J.P. Morgan expects the ECB to hike rates due to increasing inflation risks in the euro zone.
2What was the ECB's previous rate outlook from J.P. Morgan?
Previously, J.P. Morgan predicted steady ECB rates through 2026.
3What is the current ECB key interest rate?
The current ECB key interest rate stands at 2%.
4What external factor is contributing to inflation risks in the euro zone?
The Iran war is cited as a factor threatening to increase euro zone inflation.
