ING Expects European Central Bank to Hike Key Rates in December

12:23 PM EDT, 09/18/2026 (MT Newswires) -- ING now expects the European Central Bank to raise its key rates at its December 2026 monetary policy meeting, citing "subdued and subtle" hawkish messages from the regulator. "Christine Lagarde's downplaying of the concept of neutral interest rates can be seen as a way to prepare the grounds for further hikes. The fact that the staff projections see headline inflation only dropping below 2% in Q4 2027, while at the same time core inflation is expected to increase slightly were also hidden hawkish messages. At the same time, though, there are currently no signs of knock-on effects from higher energy prices," the research firm said Friday. "Still, oil prices above 100 USD/bbl and the ECB still regretting its too late response to the inflation shock in 2022 are likely to push the ECB towards another rate hike before year-end. A hike that would still fall in the category 'insurance rate hike', with an increasing risk that unwarranted damage to the economy could be done." Meanwhile, ING views market forecasts of at least two additional rate increases in 2027 as "overdone," noting that the ECB has "very little reason" to continue doing so after December 2026 if the energy price shock has "very limited" effect on other parts of the eurozone economy. "Every additional rate hike increases the risk of an unwarranted slowdown of the economy. If we are right and oil prices come down towards the end of this year and knock-effects from higher energy prices remain limited, we don't see additional rate hikes in 2027. If we are wrong, the story could clearly change," ING added.