Bond.az has lowered its eurozone inflation forecasts due to milder natural gas prices. Headline inflation is now expected to peak around 3.3% in late Q3 2026, down from the previous estimate of 4% in Q4 2026.
The bank projects eurozone HICP inflation at 2.9% in 2026 and 1.9% in 2027. Core inflation forecasts are 2.2% in 2026 and 2.1% in 2027. Inflation is seen falling below 2% again in Q2 2027.
Growth forecasts have been raised to 0.7% in 2026 and 1.2% in 2027. The lower gas profile reduces the economic shock by about a third.
The European Central Bank is expected to raise rates by 25 basis points each in June and July 2026, bringing the deposit rate to 2.5%. Quarterly rate cuts are expected starting June 2027.
