IMF anticipates that the ECB will increase interest rates by 0.5 percentage points in 2026

IMF Suggests ECB Should Adjust Interest Rates Amid Inflation Concerns

According to Alfred Kammer, who leads the European Department at the International Monetary Fund, the European Central Bank is advised to increase its main interest rate twice during this year to address rising inflation caused by energy prices. However, he indicated that these rate hikes should be reversed in 2027.

Kammer explained to Reuters that, based on the IMF's projections, the ECB may need to raise rates by approximately 50 basis points in 2026 to sustain a balanced monetary policy. He added that a reduction in rates could follow in 2027. Maintaining stable real policy rates would require an increase in nominal rates.