Investing.com -- European bond yields are expected to decline next year, and the euro could recover against the U.S. dollar, as ECB President Christine Lagarde's early departure is unlikely to alter the central bank's monetary policy outlook, according to UBS. Lagarde announced her resignation effective February 7, 2027, hours before the European Central Bank held interest rates unchanged amid persistent inflation pressures and rising energy costs. UBS expects a smooth leadership transition, arguing that inflation, wages, economic growth and financing conditions will remain the primary drivers of interest rates. The ECB has raised rates twice this year, with inflation running at roughly double its 2% target.
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