Deutsche Bank sees ECB hiking to 2.5% as energy shock lifts inflation

Hawkish for EUR rates; supports front-end yields and euro at the margin, while reinforcing stagflation risks as growth weakens and inflation rises. Deutsche Bank turns more hawkish on the ECB, arguing that energy-driven inflation risks now outweigh growth concerns, though the policy outlook remains highly uncertain.Summary:Deutsche Bank shifts ECB call in response to Middle East conflict Now expects… Deutsche Bank turns more hawkish on the ECB, arguing that energy-driven inflation risks now outweigh growth concerns, though the policy outlook remains highly uncertain. Deutsche Bank turns more hawkish on the ECB, arguing that energy-driven inflation risks now outweigh growth concerns, though the policy outlook remains highly uncertain. Summary: Deutsche Bank shifts ECB call in response to Middle East conflict Now expects ECB to hike rates to 2.50% in 2026 Two 25bp hikes seen in June and September Energy shock driving inflation back above 3% Growth outlook deteriorating, with recession risk rising Inflation expected… For traders, releases like this can quickly shift rate expectations, currency direction, index futures and broad risk sentiment. Watch the next move in the dollar, front-end yields and index futures to see whether the market prices this release as a true surprise or only a passing headline.