Anastassios Frangulidis, Head of Multi Asset and Chief Strategist at Pictet Asset Management in Zurich, had expected the rate hike in the euro area. He describes the move as a «dovish hike,» meaning that future policy decisions will also place significant weight on the weakening economic outlook.
Following the outbreak of the war in Iran, expectations for policy rates were revised sharply higher. In the United States, Frangulidis believes that markets are justified in pricing in an additional 25-basis-point rate increase over the next twelve months. As for the Swiss National Bank, no further rate changes are expected this year, he told investors in Zurich during a market outlook presentation for the second half of 2026.
Uncertainty About Warsh’s Thinking
«We still do not know how Kevin Warsh thinks,» Frangulidis said. He expects the Federal Reserve’s Federal Open Market Committee to continue placing significant emphasis on labour market developments alongside inflation when making policy decisions. Given the United States’ substantial financing needs, he currently sees little room for the balance-sheet reduction that the new Fed Chair had advocated in the past.
Frangulidis noted that economists have revised both growth and inflation forecasts since the outbreak of the Gulf conflict at the end of February. Globally, inflation projections have increased by around 0,5 percentage points to 2,5 percent, while growth expectations have been lowered by 0,2 percentage points to the same level.
