David Zahn, head of European fixed income at Franklin Templeton, said in a report that the agency's basic forecast is that the ECB will raise interest rates for the last time in September, and the inflation rate is expected to remain above the ECB's 2% target for the next few quarters. Thereafter, it is expected that the ECB will stand still to assess the impact of the austerity policies already implemented. However, Zahn said the ECB is still highly based on economic data. “If renewed tension in the Gulf pushes up energy prices and keeps inflation above target levels for a longer period of time, policymakers may be forced to consider further rate hikes. “Franklin Templeton expects the ECB to begin easing policy in 2027. The ECB raised interest rates by 25 basis points in June and is expected to stand still this week.

David Zahn, head of European fixed income at Franklin Templeton, said in a report that the agency's basic forecast is that the ECB will raise interest rates for the last time in September, and the inflation rate is expected to remain above the ECB's 2% target for the next few quarters. Thereafter, the ECB is expected to stand still to assess the impact of the austerity policies already implemented. However, Zahn said the ECB is still highly based on economic data. “If renewed tension in the Gulf pushes up energy prices and keeps inflation above target levels for a longer period of time, policymakers may be forced to consider further rate hikes. “Franklin Templeton expects the ECB to begin easing policy in 2027. The ECB raised interest rates by 25 basis points in June and is expected to stand still this week.