Capital Group Bets on ECB to Hike Rates in 2026, Boosting Euro

The European Central Bank will raise interest rates at least once this year, significantly boosting the euro against the dollar, according to Capital Group, the $3.3 trillion asset manager.

The view runs contrary to many investors and economists who expect the ECB to remain on hold through 2027. Some even reckon it may ease policy should US rate cuts under a new Federal Reserve Chair force its hand. Money markets currently price a less than one-in-three chance of a quarter-point reduction.