Samer Choucair: ECB Raises Rates as Inflation Reprices 2026 Assets
Investment leader Samer Choucair said the European Central Bank’s decision to raise its three key interest rates by 25 basis points underscores the return of inflation to the center of the investment equation in 2026.
Effective September 16, the ECB raised the deposit facility rate to 2.50%, the main refinancing operations rate to 2.65%, and the marginal lending facility rate to 2.90%. The central bank said inflation is expected to remain above its 2% target for an extended period, reinforcing the prospect that monetary policy may remain restrictive for longer than markets had previously anticipated.
Samer Choucair said the significance of the decision extends well beyond the quarter-point increase itself. Higher policy rates affect the cost of capital, discount rates, financing conditions, and ultimately the valuation of long-duration assets across European markets.
The inflation data help explain the ECB’s renewed caution. Eurostat’s flash estimate showed euro-area annual inflation accelerating to 3.3% in August from 2.9% in July, while energy inflation jumped to 14.3% from 10.3%. Inflation excluding energy, food, alcohol and tobacco stood at 2.4%.
Choucair said this combination matters because investors are facing a market in which headline inflation is being pushed higher by energy while underlying inflation remains sufficiently persistent to complicate the path back toward the ECB’s target.
The ECB’s latest staff projections put average headline inflation at 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Economic growth, meanwhile, is projected at 0.9%, 1.4% and 1.5% respectively. The ECB also revised its growth forecasts higher for 2026 and 2027, reflecting greater resilience in the euro-area economy than previously expected.
According to Samer Choucair, institutional investors will now have to reassess the discount rates applied to European assets, particularly real estate, highly valued equities, and heavily leveraged companies.
If inflation remains above target for longer, the return to the exceptionally low interest-rate environment that shaped asset valuations for much of the previous decade could take considerably more time.
For investors, that changes the valuation framework. Companies capable of generating strong free cash flow, maintaining pricing power, and operating with manageable debt burdens could become relatively more attractive, while businesses whose valuations depend heavily on distant future earnings may face greater pressure from higher discount rates.
The Gulf Requires a Different Reading
Choucair said the implications for Gulf markets should be interpreted through a different monetary and economic framework.
Saudi Arabia’s repo rate remains at 4.25%, while its reverse repo rate stands at 3.75%. These levels reflect Saudi monetary-policy requirements and the objective of preserving monetary stability rather than representing a direct response to Frankfurt’s latest decision. Official Saudi Central Bank data continue to show those policy rates at 4.25% and 3.75%, respectively.
At the same time, higher energy prices can provide oil-exporting Gulf economies with a relative revenue advantage. That benefit, however, does not eliminate the risks created by volatile crude prices or persistently elevated global financing costs.
For international investors, the result is a more complex relative-value calculation between European and Gulf assets. Europe offers mature markets and deep pools of capital, but higher inflation and renewed monetary tightening can place pressure on valuations. Gulf economies, meanwhile, can benefit from stronger energy revenues while continuing to deploy capital into infrastructure, industry, technology, and economic diversification.
Repricing the 2026 Investment Landscape
Samer Choucair said 2026 is increasingly becoming a year defined by managing differences in inflation, growth, and the cost of capital rather than simply waiting for the next interest-rate cut.
The ECB itself has emphasized that it is not committing in advance to a predetermined rate path and will continue making decisions meeting by meeting based on inflation, incoming economic data, underlying price pressures, and monetary-policy transmission.
That uncertainty has important implications for asset allocation.
Investors can no longer assume that falling policy rates will automatically lift valuations across asset classes. Instead, the quality of corporate balance sheets, durability of cash flows, pricing power, debt maturity profiles, and sensitivity to energy costs are becoming increasingly important variables in determining sustainable returns.
Choucair concluded that the investors best positioned to generate durable returns in 2026 will be those who select assets according to their ability to withstand a more volatile combination of inflation and interest rates.
For Samer Choucair, the central investment question is therefore shifting from “When will rates fall?” to a more consequential one: **Which assets can continue creating value if inflation remains volatile and the cost of capital stays higher for longer?