European Rates: ECB and BoE February meetings, skinny carry in Euro area, increased UK political noise
J.P. Morgan discusses ECB and BoE monetary policy meetings and UK political noise, noting skinny carry in Euro area and increased political uncertainty in the UK.
What the desk is arguing
The podcast argues that the ECB and BoE meetings will likely result in further rate adjustments, with the Euro area facing skinny carry and the UK encountering increased political noise that could affect rate market pricing.
Where it sits in our coverage
This commentary aligns with our consensus view that European rates are facing headwinds from central bank policy divergence and political risks. Our firm spread indicates a cautious stance on near-term Euro area rates due to low carry, while UK rates are seen as more volatile given domestic political factors.
How other firms see it
No specific contrary or aligned firm stances were mentioned in the source material.
How firms align with this view
Key takeaways
- 01ECB and BoE meetings are key focus for rate markets in February 2026.
- 02Euro area rates offer skinny carry, limiting potential returns.
- 03UK political noise adds uncertainty to BoE policy outlook.
Market implications
Expect increased volatility in European rate markets as traders digest the outcomes of central bank meetings. UK gilt yields may be more reactive to political developments, while Euro area rates could remain range-bound given low carry.
Risks to this view
Unexpected hawkishness from ECB or BoE could steepen rate curves. UK political instability may lead to a repricing of rate expectations, while Euro area skinny carry leaves little margin for error.
In this podcast Francis Diamond, Aditya Chordia and Khagendra Gupta discuss the ECB and BoE monetary policy meetings and implications for rate markets as well as the political noise this week in the UK. This podcast was recorded on 06 February 2026. This communication is provided for information purposes only.
Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-5193724-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2026 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P.
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Sources & References
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