BNP Paribas forecasts inflation rising to 3.3% by 2027, prompting two 25 bp ECB hikes next year to 2.5%.
Eurozone inflation is projected to rebound to 3.0% in 2026 and 3.3% in 2027, up from 2.1% in 2025, according to economists. This surge is expected to trigger two 25-basis-point European Central Bank rate hikes in 2026, lifting the deposit rate to 2.5%.
GDP growth is forecast to slow from 1.5% in 2025 to 1.0% in 2026 before recovering slightly to 1.3% in 2027. The slowdown is attributed to tighter ECB policy and spillovers from the Middle East conflict, though investment in defense, AI, and electrification may cushion the impact.
The first rate hike is anticipated in June 2026, reflecting the ECB’s response to persistent inflationary pressures. The projections highlight a delicate balance between growth and price stability in the Eurozone.