(Corrects paragraph 2 to say that Barclays and J.P. Morgan expect a second rate hike in June and July, respectively, not rate hikes in June and July)
March 20 (Reuters) – J.P. Morgan, Morgan Stanley and Barclays expect the European Central Bank to hike interest rates in 2026, a sharp shift from their previous forecasts for rates to remain on hold, as policymakers flagged rising inflation risks from the Middle East war.
Barclays and J.P. Morgan expect a rate hike in the ECB’s April policy meeting, followed by further increases in June and July, respectively.
Morgan Stanley expects 25-basis-point hikes each in June and September.
The sudden shift comes after the ECB kept its key interest rate steady at 2% on Thursday, but policymakers expect to discuss hikes in the coming months as the Iran war threatens to push up inflation in the euro zone.
(Reporting by Siddarth S in Bengaluru; Editing by Sonia Cheema)
