Think ahead its economists vs markets and there can only be one winner

Key arguments

• Markets price roughly three hikes each from the ECB and Fed by this time next year, versus ING's forecast of one from each, plus modest cuts in late 2027 and 2028.
• Market pricing has been accurate on the ECB but consistently wrong on the Bank of England, which has not hiked.
• The debate may be settled by spring 2027 as energy effects fade and inflation stays calmer than officials fear.
• Higher French-led bond yields and a US 10-year above 5% may substitute for about one rate hike.

Corresponding source evidence

1. In his guide to the week ahead, James Smith argues that by next spring, calmer inflation and less hawkish central banks could force a long-overdue rethink in financial markets over the outlook for interest rates In the blue corner: economists.
2. Second, central banks believe the higher energy prices go, or the longer they stay high, the more likely we are to get second-round effects on inflation.
3. That makes sense: my eurozone colleagues reckon higher longer-term borrowing costs will have a similar impact on growth and inflation as one rate hike.