ECB Raises 2027 Inflation Forecast to 2.5%

ECB President Christine Lagarde told the European Parliament's ECON committee in Brussels on Sept. 28, 2026, that September projections put headline HICP at 2.5% in 2027 and 2.1% in 2028, up from June's 2.3% and 2.0%. Headline for 2026 is projected at 3.0%; core at 2.5%, 2.6% and 2.3% across 2026-2028. Inflation has risen above 3% and could approach 4% by end-2026 on an energy shock linked to the US-Iran conflict. The deposit rate is 2.5% after June and September hikes. Lagarde said the bank sees higher inflation ahead but no signs yet that it is becoming embedded, and does not see evidence at this stage of energy prices feeding into higher wages. While the shock is too large to look through, a measured response is appropriate to keep inflation in check. Markets price up to four more hikes; many economists expect no change on Oct. 29 and a possible December move with new projections. Severe scenarios model oil toward US$145 a barrel and European gas at €106 per MWh, with energy inflation near a 15% end-2026 peak. GDP is projected at 0.9% in 2026 and 1.4% in 2027; unemployment at 6.4%. CONTESTED: none found. Sources agree on the figures and Lagarde quotes. Framing differs: Bloomberg led on higher yields slowing growth and inflation; center coverage led on the higher 2027 outlook. No right-rated coverage in the record.