Germany’s 10-year Bund yield climbed above 3.45%, reaching its highest level since April 2011, as investors digested the ECB’s latest rate decision while a renewed oil rally intensified inflation concerns and fueled expectations of further monetary tightening. The ECB delivered its second rate hike since the US-Iran war began, warning that inflation is likely to remain well above its 2% target for an extended period. It kept its 2026 inflation forecast at 3.0% but raised projections for 2027 and 2028 to 2.5% and 2.1%, respectively. Meanwhile, GDP growth forecasts were upgraded to 0.9% for 2026 and 1.4% for 2027, while the 2028 forecast remained unchanged at 1.5%. Renewed energy-price pressures are adding to the inflation outlook, with Brent crude hitting $105 a barrel and European gas prices reaching fresh three-and-a-half-year highs amid escalating Middle East tensions. Markets are now pricing in another ECB rate hike by December, with further tightening expected in 2027.