How Long Will Rates Stay at 2.5%
Economists expect the European Central Bank to raise interest rates by a quarter-point next week, with the deposit rate reaching 2.5% on Thursday. This would mark the final increase in the current tightening cycle, according to a Bloomberg survey of financial experts. The consensus suggests rates will remain at this level through 2027, signaling a pause after months of hikes aimed at curbing inflation in the eurozone.
The survey indicates strong agreement among economists that no further increases are anticipated beyond the upcoming decision. Inflation pressures have eased sufficiently to allow the ECB to halt its rate-raising campaign. Policymakers are now focused on maintaining stability while avoiding premature cuts that could reignite price growth. The projected 2.5% deposit rate would represent the highest level since the euro's inception, reflecting the aggressive response to post-pandemic and energy-driven inflation.
What If Inflation Rises Again
Economists surveyed by Bloomberg expect the ECB to hold the deposit rate at 2.5% through at least 2027. This extended pause reflects confidence that inflation is on a sustainable path toward the 2% target. No major economic shocks are forecasted that would necessitate additional tightening. The outlook assumes moderate growth and controlled wage increases across member states.
Should inflation rebound unexpectedly, the ECB retains the option to resume rate hikes, though economists consider this unlikely. Survey respondents emphasized that any reversal would require clear evidence of persistent price pressures. The central bank’s forward guidance remains data-dependent, but the current trajectory favors stability. Policymakers are wary of undermining economic recovery with premature or excessive tightening.
Will the ECB cut rates in 2027? Economists do not anticipate rate cuts before 2028, based on current inflation and growth projections. Any reduction would depend on sustained progress toward the 2% inflation target.
Frequently Asked Questions
Could the hike be larger than a quarter-point? No, the survey shows unanimous expectation for a 25-basis-point increase. A larger move is not considered necessary given recent inflation trends.
Is 2.5% the peak rate for this cycle? Yes, the majority of economists view this as the terminal rate, with no further increases expected after next week’s decision.