- 67 of 79 (~85%) of economists said rates would remain unchanged through 2026
- All 83 economists expect no change to the deposit rate for the 5 February policy decision
The poll numbers sum up very well the market expectations currently towards the ECB. And the ~85% share of opinion of no change in rates for this year is even higher than the poll last month (~75%) and in November (~66%). So, that reflects an increasing and stronger view that the central bank is not going to be able to do much on the policy front in 2026.
As things stand, the ECB looks like they have gotten inflation down to as close as 2% as they can get it to. Stubborn price pressures in the likes of Germany and Spain is making it tough for the central bank to take any further action to ease interest rates. And potential stagflation risks in the former is still something that policymakers need to be mindful of.
Given the circumstances, they also have to be mindful of the more persistent impact of things like US tariffs. The drive up in inflation may not be over and could circle back in due time. As such, the other side of the coin suggests that they have to retain some flexibility to be open to the idea of perhaps needing to raise interest rates again in the coming year or two.
In fact, a majority of a smaller sample of 36 respondents in the poll said that the next step by the ECB would be a rate hike and not a rate cut.
So, that's where we are seeing the ECB now.
