Top asset management giant Capital Group is betting that the European Central Bank will raise interest rates in 2026, contrary to mainstream views.

Capital Group, an asset management company with assets under management of $3.3 trillion, stated that the European Central Bank will raise interest rates at least once this year, which will significantly boost the Euro against the US Dollar. This view contradicts the expectations of many investors and economists who believe the ECB will keep rates unchanged until 2027. Some even predict that if the US, under the new Federal Reserve Chairman, lowers interest rates, it may force the ECB to take action and loosen its policy. Currently, the likelihood of a 25 basis point rate cut is less than one-third according to the currency markets. However, Capital Group's Chief Investment Officer Edward Harrold predicts that European economic growth will accelerate, causing a divergence in policy paths between the ECB and the Federal Reserve. He stated in an interview that this will push the Euro to the "1.20 range high by the end of the year." The Euro against the US Dollar was around 1.1860 on Friday.