ECB to hold rates at 2% through 2026, economists say
Economist polls indicate the ECB will keep the deposit rate at 2% at the Oct. 30 Governing Council meeting in Florence and likely through 2026. Here’s why the pause matters for borrowing costs, the euro, and market sentiment.
It looks like a deliberate pause after a volatile stretch. In 2022–2023 the ECB tightened aggressively from –0.5% to 4.0% to tame inflation fuelled by energy turbulence and post‑pandemic imbalances. As price pressures eased and growth turned modest but steady, the ECB moved to normalization in 2025 and lowered the rate to 2%. Officials now judge financial conditions as broadly appropriate, inflation close to target and the current balance too fragile to upset.
The expert consensus is straightforward: 2026 passes with the rate held at 2%, and beyond that the path depends on the data. Euro‑area GDP is expected to expand by roughly 1% a year, inflation to hover near target, and the labor market to cool gradually.
For policymakers, this is a good setting to watch how the accumulated tightening feeds through. Monetary transmission lags by design, and rushing risks doing harm. A further argument is the cautious path of the US Federal Reserve; Europe has little incentive to widen transatlantic divergence or jolt exchange rates amid geopolitical uncertainty and tightening dollar liquidity.
Even so, any new macro shock (energy prices, logistics disruptions, weakness in large economies such as Germany and France, or budget surprises) could quickly change the picture. In that case, the ECB would most likely resume easing.For now, markets have a clear anchor: a long horizon with a 2% rate.
For companies, that means more predictable funding costs and calmer debt markets; for households, steadier mortgage payments.
Ultimately, this setup rests on the data, such as consumer prices and labor indicators, which the ECB now watches more closely than any political headlines.
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