The European Central Bank should lift its key interest rate twice this year to combat an energy-driven inflation surge, but should then reverse these moves in 2027, the International Monetary Fund’s European Department chief said on Friday. “Under our reference scenario, we would expect the ECB to raise rates by about 50 basis points in 2026 in order to maintain a neutral monetary stance,” Alfred Kammer, the head of the IMF’s European Department, told Reuters. “Then, in 2027, rates could come down again. If you want to keep the real policy interest rates constant, you would need to increase the nominal.

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