ECB Expected To Keep Rates On Hold Until The End Of 2026 – What It Means For The Euro Area Economy
A new Reuters poll of economists suggests the European Central Bank is likely to keep interest rates unchanged at around 2 percent through the end of 2026. Here is what that means for inflation, borrowing costs, savings and the wider euro area economy.
ECB Expected To Keep Rates On Hold Until The End Of 2026 – What It Means For The Euro Area Economy
A recent Reuters poll indicates that the European Central Bank (ECB) is expected to keep its main interest rates unchanged at around 2 percent through the end of 2026, as inflation in the euro area remains close to target and growth is steady but moderate.
Source (Reuters poll, 10 December 2025):
https://www.reuters.com/business/finance/ecb-stay-hold-through-end-2026-expected-stable-economic-outlook-2025-12-10/
According to the survey, which covered 96 economists between 5 and 10 December 2025, all respondents expect the ECB to leave rates unchanged at the next policy meeting on 18 December. Around 80 percent expect no move at least until the middle of 2026, and nearly 75 percent see rates unchanged through the end of that year.
Current Inflation Picture In The Euro Area
The latest official data from Eurostat shows that inflation in the euro area has moved very close to the ECB target of 2 percent.
Eurostat release for October 2025:
https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-19112025-ap
Key points from the Eurostat figures:
- Annual inflation in the euro area was 2.1 percent in October 2025, down from 2.2 percent in September.
- Inflation in the wider European Union was 2.5 percent in October 2025.
- The main contribution to euro area inflation came from services, followed by food, alcohol and tobacco, while energy made a small negative contribution.
In other words, price growth is now very close to the ECB definition of price stability, which is an inflation rate of 2 percent over the medium term. This is one of the main reasons economists expect the central bank to wait before making any further changes to interest rates.
Why The ECB Is Expected To Stay On Hold
The Reuters poll and recent comments from ECB officials point to several reasons for keeping rates steady:
-
Inflation near target
- With inflation around 2.1 percent, there is less pressure to tighten policy further.
- The poll suggests inflation is expected to remain close to target in 2026, making large changes in rates less likely.
-
Stable but modest growth
- The euro area economy has avoided a deeper downturn and has grown at roughly 1.4 to 1.5 percent over recent quarters.
- ECB President Christine Lagarde has described the outlook as stable, with some resilience in the labour market.
-
Desire to avoid unnecessary volatility
- After several years of rapid rate increases and then pauses, policymakers want to provide predictability for households, firms and financial markets.
- A long period of stable rates can help businesses plan investment and financing decisions more easily.
-
Space to react if conditions change
- The ECB has indicated that it could cut rates if there is a sharp downturn, but prefers to wait for clear signals rather than acting pre emptively.
Full Reuters article with poll details:
https://www.reuters.com/business/finance/ecb-stay-hold-through-end-2026-expected-stable-economic-outlook-2025-12-10/
What This Means For Borrowers
If the ECB keeps rates unchanged until the end of 2026, euro area borrowing costs may remain relatively stable compared with the sharp swings of recent years.
For households and businesses:
-
Mortgages
- New mortgage rates in euro area countries that follow ECB policy closely may stay broadly around current levels, unless banks adjust margins or local conditions change.
- People taking out new loans can plan on the basis that major rate swings are less likely in the near term, but local bank pricing can still vary.
-
Consumer credit
- Interest on credit cards and personal loans is still higher than during the very low rate period, but further sudden increases are now seen as less likely.
- Households considering large purchases that require credit can factor in more stable expectations for interest costs.
-
Business loans
- Companies that rely on bank financing for investment projects benefit from a more predictable rate path.
- However, borrowing costs remain higher than during the pre pandemic era of ultra low rates, so projects still need to clear a higher hurdle for profitability.
What It Means For Savers And Investors
A long period of steady ECB rates also has implications for savers and financial markets:
-
Savings accounts and term deposits
- Banks are likely to keep deposit rates broadly in line with current conditions, though competition between banks may still drive differences in offers.
- Savers benefit from better returns compared with the near zero rate environment before 2022, but these rates may gradually drift lower if banks anticipate future cuts.
-
Bond markets
- Government and corporate bond yields in the euro area are strongly influenced by expectations of future policy.
- If investors believe the ECB will hold steady and inflation stays close to target, long term yields may stabilise, reducing volatility for pension funds and fixed income investors.
-
Equities and risk assets
- A stable rate backdrop can support equity markets, as firms face fewer uncertainties about financing costs.
- However, slower growth and structural challenges in some euro area economies may limit upside in certain sectors.
Risks That Could Change The Outlook
While the central scenario in the Reuters poll is a long hold, several risks could push the ECB to change rates earlier:
-
Stronger than expected inflation
- If energy prices rise sharply again or wage growth accelerates significantly, inflation could move above target and force the ECB to consider further tightening.
-
Growth shock or financial stress
- A severe slowdown in major economies, or stress in parts of the banking system, could lead to earlier rate cuts to support activity.
-
External shocks
- Geopolitical events or trade disruptions can affect energy prices, confidence and global demand, which would then feed into euro area conditions.
At this stage, the poll suggests economists see these as risks rather than as the base case.
How Households Can Respond
For households in the euro area, the key message is one of relative stability rather than dramatic change:
- People who plan to take out a mortgage or refinance may find the next year or two offer a more predictable environment.
- Budgeting and saving plans can be built around the assumption that interest on loans and deposits is unlikely to move sharply in the near term, although local bank pricing can always change.
- Individuals should still review their own financial situation, including debt levels and emergency savings, rather than relying solely on central bank forecasts.
Summary
The latest Reuters survey and Eurostat data together give a picture of an economy where:
- Inflation is close to the 2 percent target, at about 2.1 percent in October 2025.
- Growth is modest but relatively steady.
- The ECB is widely expected to hold interest rates at current levels through the end of 2026, barring major shocks.
This environment reduces uncertainty for borrowers, savers and businesses, but it does not remove all risks. Energy prices, global demand and domestic reforms will all continue to shape the euro area outlook over the next two years.
Sources
-
Reuters poll on ECB rates and economic outlook, 10 December 2025:
https://www.reuters.com/business/finance/ecb-stay-hold-through-end-2026-expected-stable-economic-outlook-2025-12-10/ -
Eurostat euro area inflation release, 19 November 2025 (October 2025 data):
https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-19112025-ap
Disclaimer: This article is for general informational and educational purposes only. It is not financial, investment, tax or legal advice, and it does not take into account your personal circumstances.
