ECB Hikes 25 bp and Lifts 2027–28 Inflation Projections; Markets Price More Tightening

The ECB raised key rates by 25 bp, citing inflation persistence linked to Middle East conflict, and published staff projections with headline inflation averaging 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. Eurozone bond yields hit multi‑year highs as futures priced a high probability of at least one additional 2026 hike.