UBS says Middle East war complicates ECB policy outlook in World Economy News 10/03/2026 The European Central Bank will hold rates at 2% next week but faces rising pressure to hike sooner than expected after the Iran war drove oil prices up 27% and European gas prices up 73%, creating simultaneous upward pressure on inflation and a drag on growth, UBS said in a note dated Monday. Stay ahead with live news, stock impact insights, and Wall Street analysis – save 50% Markets already reflect the shift. Pricing that pointed to cumulative rate cuts of 6-8 basis points through 2026 swung to 32 basis points of cumulative hikes by December 2026, a move UBS said was amplified by February eurozone inflation printing at 1.9% year-on-year, 0.2 percentage points above expectations. UBS said the ECB would likely present multiple forecast scenarios at its March 19 meeting, given that its technical assumptions, fixed around Feb. 20, before the escalation, were already outdated. Under the pre-war baseline, the bank expected the ECB to hold its GDP growth forecasts at 1.2% for 2026 and 1.4% for 2027 and 2028, while nudging headline inflation projections up 0.1 percentage points to 2% for 2026 and 1.9% for 2027. A short-lived energy shock scenario would push inflation 10-20 basis points higher and trim 2026 GDP growth by 10 basis points relative to that baseline. A prolonged conflict would deliver a larger and more lasting hit to both. The ECB’s long-standing practice is to look through external energy shocks, treating the initial price impact as inevitable and potentially temporary. But UBS said policymakers would watch closely for second-round effects, energy-driven inflation feeding into wage growth and making price pressures more persistent. ECB Vice President Luis de Guindos warned last week that a prolonged conflict could push inflation expectations higher. Policymakers including Bundesbank President Joachim Nagel, Bank of Finland Governor Olli Rehn and Chief Economist Philip Lane have all flagged the conflict’s duration as the critical variable, UBS noted. Underlying data offer a mixed picture. Core inflation rose to 2.4% year-on-year in February from 2.2% in January. Services inflation held at 3.4%. UBS’s negotiated wage tracker slowed to 3.1% in January from 3.4% in December. The eurozone composite PMI stood at 51.9 in February and the unemployment rate fell to 6.1% in January. UBS said the ECB would decline to pre-commit to any rate path and could no longer characterise itself as being “in a good place,” instead shifting to a wait-and-see mode pending greater clarity on the conflict and its economic consequences. Source: Investing.com 2026-03-10 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0], load = function(url, id) { if (d.getElementById(id)) {return;} js = d.createElement(s); js.src = url; js.id = id; fjs.parentNode.insertBefore(js, fjs); }; load('//connect.facebook.net/en/all.js#xfbml=1', 'fbjssdk'); load('https://apis.google.com/js/plusone.js', 'gplus1js'); load('//platform.twitter.com/widgets.js', 'tweetjs'); } if (w.addEventListener) { w.addEventListener("load", go, false); } else if (w.attachEvent) { w.attachEvent("onload",go); } }(window, document, 'script')); tweet Share