Report published September 25, 2026
Europe Economic Weekly: Unconstructive Ambiguity – Bank of America Global Research
Bank of America · September 25, 2026
BofA updates its European and UK macroeconomic projections, factoring in higher winter energy prices and tighter financial conditions. The analysts pencil in a December 2026 ECB hike and two BoE hikes to 4.25%, but argue market pricing of aggressive, prolonged tightening cycles is overdone.
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Finvaulta summarizes Bank of America's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Euro area inflation forecasts are revised up to 3.0% in 2026 and 2.5% in 2027 due to higher winter energy prices, with an ECB hike pencilled in for Dec-26.
- 2.UK headline inflation is expected to peak at 4.2% in Feb-27, prompting the Bank of England to hike rates in Nov-26 and Feb-27 to 4.25% before cutting in 2028.
- 3.The SNB kept policy rates at 0% and reduced urgency around FX interventions, prompting BofA strategists to recommend going long 2y1y SARON and short CHF via carry.
Table of Contents
- Weekly view: “Non linearities” back in active vocabulary
- Euro area: Forecast update – a tougher winter
- UK: Forecast update – hawkish drift
- Hot Topic 1: SNB review: still comfortably on hold
- Hot Topic 2: Nordic reviews: an hawkish hold & 25bp hike to peak-rate
- Forecast tables
- Calendar for the week ahead
Report data
Exhibit 1: We embed our colleagues’ new Brent and TTF forecasts. Synthetic energy prices now look close to the ECB adverse scenario in the winter, but still very far from the severe scenario.
| Metric | Estimate | Context |
|---|---|---|
| Euro Area Headline Inflation Forecast | 3.0% | Revised upward due to higher winter energy price assumptions |
| Euro Area Headline Inflation Forecast | 2.5% | Forecast revision driven by prolonged energy prices and tighter conditions |
| UK Headline CPI Inflation Peak Forecast | 4.2% | Peak inflation raised from 3.5% previously expected in Nov-26 |
| Bank of England Terminal Bank Rate Forecast | 4.25% | Expected two 25bp hikes in Nov-26 and Feb-27 to reach 4.25% |
| Swiss National Bank Policy Rate | 0.0% | SNB held rate unchanged at 0% |
Reports in this series
Europe Economic Weekly is shown in chronological order through this edition, published on September 25, 2026.
Part of the Europe Economic Weekly series — view all 6 editions
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