ECB Staff Projections: Headline and core inflation forecasts raised, GDP forecast trimmed for 2026/27

The ECB has raised its inflation forecasts significantly while trimming GDP expectations for 2026 and 2027, suggesting a persistent inflationary environment.

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HICP:

  • 2026: 2.6% (prev. 1.9%, Sep. 1.7%),
  • 2027: 2.0% (prev. 2.0%, Sep. 1.9%),
  • 2028: 2.1% (prev. 2.0%)

Core-HICP:

  • 2026: 2.3% (prev. 2.2%, Sep. 1.9%)
  • 2027: 2.2% (prev. 1.9%, Sep. 1.8%)
  • 2028: 2.1% (prev. 2.0%)

Growth:

  • 2026: 0.9% (prev. 1.2%, Sep. 1.0%)
  • 2027: 1.3% (prev. 1.4%, Sep. 1.3%)
  • 2028: 1.4% (prev. 1.4%)
Context

This divergence implies potential challenges for the ECB in balancing inflation control and economic growth, which could influence future monetary policy decisions and market sentiment, particularly in fixed income. Traders should monitor how this might shift expectations for interest rate paths ahead.

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