ECB Rate Strategy: Prolonged Steadiness or Imminent Hike?

The European Central Bank is anticipated to maintain steady interest rates potentially through 2026, as projected by global brokerages. Some analysts even predict a future rate hike, following the ECB's decision to leave rates unchanged and its positive outlook on economic growth and inflation.

Christine Lagarde, President of the ECB, highlighted at a press conference that inflation levels and the domestic economy are meeting the central bank's targets. This optimistic view led UBS Global Wealth Management to discard its forecast for a rate cut this December, aligning with expectations from Goldman Sachs.

Trading activity reflects an 84% chance of steady rates until the end of 2025. Moreover, firms like TD Securities and Deutsche Bank project a possible rate hike in 2026. However, the inflation outlook remains uncertain, as acknowledged by J.P. Morgan, which deferred its rate cut prediction from October to December.

(With inputs from agencies.)