JPMorgan Asset Management and Pictet both expect the European Central Bank’s upcoming rate increase to be its last, a forecast that sets them apart from other analysts and could fuel sharp swings in bond yields, currency markets, and risk assets.
What ‘one and done’ means for the ECB
The two money managers say the ECB will deliver a single, final hike before pausing its tightening cycle. Their view rests on a belief that inflation pressures in the eurozone are cooling enough to let the central bank stop after one more move. Neither firm spelled out the exact size of the expected increase, but the consensus among economists has pointed to a quarter-point rise.
If JPMorgan and Pictet are right, the ECB would join several other major central banks that have signaled an end to rate increases. The Bank of Canada and the Reserve Bank of Australia have both held rates steady in recent months, and the U.S. Federal Reserve is widely seen as near its own peak.
Why divergent forecasts could rattle markets
Not everyone agrees. Many economists and traders still bet the ECB will need to raise rates more than once because core inflation remains sticky and wage growth is robust. That split in expectations — a “one and done” camp versus a “higher for longer” camp — creates uncertainty.
When forecasts diverge sharply, markets tend to overreact to every new data point or central banker comment. A single inflation print that comes in hotter than expected could send bond yields surging and the euro jumping, while a soft number might trigger the opposite. The risk is that volatility spikes just as the ECB tries to telegraph a clear path forward.
Pictet’s and JPMorgan’s stance also implies that the ECB’s terminal rate — the level at which it stops — is lower than what futures markets currently price. If the central bank later confirms that view, bund yields could fall and the euro could weaken. If it pushes back, the reverse happens.
What comes next
The ECB’s next policy meeting is set for September 14. Before then, investors will comb through the August inflation report and the quarterly staff projections for growth and prices. Those numbers will either bolster the one-and-done thesis or undermine it.
For now, the market’s attention is fixed on the spread between the two narratives. The bigger the gap, the sharper the eventual move when reality catches up.
