Europe Economic Weekly Mid-Year Review

BofA researchers present a mid-year forecast update for Europe, noting that lower energy prices provide relief through reduced inflation and improved growth expectations. Consequently, central bank policy outlooks have shifted, with the Bank of England pausing hikes and the ECB delaying and slowing its tightening path.

Key Takeaways

• 1.Lower energy prices are facilitating a slightly better growth outlook and lower inflation forecasts for Europe, though the recovery remains unspectacular.
• 2.ECB is expected to deliver a second hike in September, with a shift to quarterly cuts starting in March 2027.
• 3.The Bank of England is now expected to remain on hold in 2026, with only one rate cut anticipated in November 2027.

Table of Contents

• Weekly view
• Euro area: it could have been worse
• UK: BoE on hold in 2026, near-term risks still for a hike
• Next week
• Euro Area
• Euro Area mid-year review: it could have been worse, but it's still not great
• UK
• Mid-year review: BoE on hold in 2026, near-term risks still for a hike
• Forecast tables
• Calendar for the week ahead
• Acronyms and abbreviations
• Important Disclosures

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