Traders raise ECB, BOE rate hike bets; see 4 hikes by end-2027

The market's repricing of four ECB and BOE hikes by end-2027 signals a decisive break from the recent easing narrative, pointing to entrenched inflation concerns that could keep policy restrictive for years. This affects rate-sensitive sectors and fiscal planning across Europe and the UK, as governments and corporates face a higher-for-longer cost of capital. The key question is whether actual central bank guidance and incoming inflation data will validate this aggressive path, or if traders are overextending on a few weak data points. Watch for any divergence in pricing between the ECB and BOE, as their differing economic backdrops could drive relative currency and bond market moves.