The threshold for further interest rate hikes has been surpassed, but the path toward 3% remains uncertain without a strong economic acceleration. According to the source, the threshold for further rate hikes has been surpassed, marking a crucial turning point for the eurozone economy. The decision by Schroders, led by David Rees, indicates that the market can no longer assume a rise in rates toward 3% without a strong acceleration in growth and inflation.

This change represents a break from previous expectations, where growth was considered stable. Future prospects have become much more uncertain, with current market conditions that could lead to significant slowing. Higher energy prices will maintain overall inflation, but core inflation has remained under control.

Domestic demand is weakening, creating fertile ground for further tightening of monetary policy. The greater energy costs, combined with more restrictive financial conditions, will likely weigh on eurozone growth, particularly in 2027. The company has communicated that 2027 will be the reference point for monetary policy evaluation, not 2026.

This temporal shift suggests that economic deceleration could begin sooner than expected. European economic growth should not be considered automatic, but rather conditioned by external and internal factors. Domestic demand is weakening, and greater energy costs, combined with more restrictive financial conditions, will likely weigh on eurozone growth.

This means that every increase in rates will have a more direct and lasting impact on GDP. Markets should not assume that rates will rise toward 3%, unless growth and inflation accelerate significantly. The source specifically that 2027 will be the reference point for monetary policy evaluation, not 2026.

This indicates that economic deceleration could begin sooner than expected, with cascading effects on the financial system. Expected developments will depend on the ability of the eurozone economy to resist energy and financial shocks. The source specifically that 2027 will be the reference point for monetary policy evaluation, not 2026.

If growth does not accelerate, rates could remain stuck for a long time, with unpredictable consequences for investments and international trade.