10.09.202612:35:23UTC+00Bund Yield Hits 15-Year High as ECB Hikes Rates Again

Germany’s 10-year Bund yield rose above 3.45%, its highest level since April 2011, as investors absorbed the ECB’s latest rate decision against the backdrop of a renewed rally in oil prices. The upswing in energy costs has intensified inflation concerns and bolstered expectations of further monetary tightening.

The ECB implemented its second rate increase since the outbreak of the US–Iran war, cautioning that inflation is likely to remain well above its 2% target for an extended period. The central bank left its 2026 inflation forecast unchanged at 3.0%, but revised its projections for 2027 and 2028 upward to 2.5% and 2.1%, respectively.

On the growth side, the ECB raised its GDP forecasts to 0.9% for 2026 and 1.4% for 2027, while keeping its 2028 projection steady at 1.5%.

Renewed energy-price pressures are feeding into the inflation outlook, with Brent crude climbing to $105 per barrel and European gas prices hitting fresh three-and-a-half-year highs amid escalating tensions in the Middle East. Money markets now anticipate another ECB rate hike by December, with additional tightening expected in 2027.