★Won't Be Seeing Three ECB Rate Hikes in 2026, BlackRock Says

The Big Market Report Take

BlackRock's global fixed income head in EMEA, James Turner, is pouring cold water on expectations for multiple European Central Bank rate hikes in 2026, citing the ongoing supply-side shocks from geopolitical tensions in the Middle East. This perspective is crucial because it suggests that while inflation might persist due to these supply disruptions, the ECB's ability or willingness to aggressively tighten monetary policy could be constrained, potentially leading to a more dovish stance than some market participants anticipate. For investors, this implies a potentially different trajectory for European bond yields and currency strength than if demand-side pressures were the primary driver of inflation. The key thing to watch going forward is how quickly these supply chain issues resolve and whether the ECB prioritizes combating inflation or supporting economic growth amidst these external shocks.