Societe Generale warns rising oil and gas prices may force the ECB to tighten further by early 2027 amid Gulf tensions.
Oil prices have climbed over $20 since the ECB’s June meeting, erasing earlier optimism from a US-Iran agreement. Natural gas prices surged 25% in the same period, matching levels that previously triggered a 25-basis-point rate hike.
Markets now price in two additional rate increases by early 2027, though second-round inflation effects remain absent. The ECB is expected to hold rates today but may debate further tightening if Gulf tensions persist.
Strategists suggest a September hike to 2.50% could become inevitable without de-escalation, as energy shocks reshape the policy outlook.