ECB interest-rate forecasts – Projections for the next five years

The ECB raised all three key policy rates in June 2026, taking the deposit facility rate to 2.25% as inflation pressures returned (Morningstar, 11 June 2026).

As the primary monetary authority for the 21 countries that use the euro, the European Central Bank (ECB) has a direct influence on monetary conditions across the eurozone. One of its main tools is the setting of benchmark interest rates, which affect borrowing costs, savings rates, lending activity and inflation.

ECB interest-rate forecasts are followed by investors, policymakers, businesses and households. They can help explain the wider backdrop for financial planning, risk management and market pricing. Looking ahead to the next five years, the path of ECB rates will depend on how inflation, growth, wage pressures and energy prices develop.

Understanding ECB interest-rate decisions

The ECB’s primary mandate is price stability, defined as inflation of 2% over the medium term (European Central Bank, 11 June 2026). When inflation is too high, the ECB may raise rates to restrain demand and borrowing. When inflation is low, or when economic activity weakens, it may cut rates to support financial conditions. The ECB has consistently stated in recent communications, including its June 2026 update, that its decisions remain focused on bringing inflation back to its 2% target over the medium term (CaixaBank, 16 September 2025).

The ECB also considers GDP growth, unemployment, wage trends, fiscal policy, financial conditions, geopolitical risks and global demand. Its aim is to keep inflation under control without placing unnecessary pressure on the wider economy.

The ECB sets three key policy rates:

• Main refinancing operations (MRO) rate: the rate at which banks borrow from the ECB for one week.
• Deposit facility rate: the rate banks receive for overnight deposits held at the ECB.
• Marginal lending facility rate: the rate banks pay for overnight borrowing from the ECB.

As of 13 July 2026, the deposit facility rate is 2.25%, the MRO rate is 2.4% and the marginal lending facility rate is 2.65%, based on ECB announcements from June 2026. These rates have applied since 17 June 2026.

Current economic climate and ECB monetary policy

As of 13 July 2026, the ECB is maintaining a relatively restrictive stance after pausing through late 2025 and early 2026. The Governing Council raised all three key policy rates by 25 basis points at its 10-11 June 2026 meeting. The last confirmed levels before the move were 2% for the deposit facility, 2.15% for the MRO rate and 2.4% for the marginal lending facility. From 17 June 2026, those rates rose to 2.25%, 2.4% and 2.65%, respectively (ECB, 11 June 2026).

The decision reflected a renewed inflation shock linked to higher energy costs and geopolitical risk. The ECB’s June projections put headline inflation at 3% in 2026, 2.3% in 2027 and 2% in 2028. Inflation excluding energy and food was projected at 2.5% in both 2026 and 2027, before easing to 2.2% in 2028.

Recent inflation data have also pointed to continued price pressures. Eurostat’s flash estimate put euro-area annual inflation at 2.8% in June 2026, down from 3.2% in May. Energy had the highest annual rate at 8.7%, while services inflation remained elevated at 3.2%.

Growth remains subdued. The ECB’s June staff projections suggested real GDP growth of 0.8% in 2026, 1.2% in 2027 and 1.5% in 2028, with higher energy prices and uncertainty weighing on domestic demand.

Key ECB facts as of 13 July 2026

Figures below reflect ECB communications and may change after future Governing Council decisions.

The ECB has stressed that policy will remain data-dependent and meeting by meeting, with no pre-commitment to a particular rate path. The next monetary policy meeting is scheduled for 22-23 July 2026, followed by a press conference on 23 July (ECB, 11 June 2026; ECB, 11 June 2026).

Projected ECB interest rates in five years

Wondering about projected ECB interest rates in five years? No forecast is certain, but economists, market participants and policymakers continue to track the likely direction of euro-area monetary policy.

The ECB’s future decisions will depend mainly on inflation, wage growth, energy prices, GDP growth and financial conditions. Compare projected US interest rates to see how differences in central bank policy can affect global markets.

Below, we look at projected ECB interest rates for 2026, the short-term outlook and the factors that could shape rates through 2030.

Short-term ECB interest-rate projections: next 12-24 months

As of July 2026, the near-term debate has shifted. Earlier in the year, forecasts focused on whether the ECB would keep the deposit rate at 2% or start cutting. After the June hike, the main question is whether rates stay at 2.25% or rise again later in 2026.

The current short-term outlook can be framed in three broad scenarios:

• Base case: the deposit rate stays at 2.25%, with a material chance of one further 25-basis-point hike by the end of 2026.
• Lower-rate scenario: the June hike proves to be the peak, with cuts considered only later if growth weakens and inflation undershoots the ECB’s projected path.
• Higher-rate scenario: a second 2026 hike takes the deposit rate to 2.5%, followed by a longer hold if energy costs, wages or services inflation remain elevated.

This marks a clear shift from the late-2025 consensus, when many forecasts pointed to a steady 2% deposit rate through at least mid-2026. The policy discussion has moved from early easing towards a higher-for-longer setting.

These scenarios are based on current policy signals and third-party market context. They are not Capital.com predictions and should not be read as investment advice.

Medium-term ECB interest-rate outlook: three to five years

Over the medium term, forecasts become less certain. Many projections still cluster around a 'neutral' zone, where interest rates neither strongly stimulate nor significantly restrict the economy. In practice, this is often discussed as a roughly 2%-2.5% range for the deposit facility rate, although estimates can change with inflation, productivity, fiscal policy and global conditions.

The ECB’s June 2026 projections suggest inflation returning to 2% in 2028, but only after above-target inflation in 2026 and 2027. This supports the view that policy may need to remain mildly restrictive for longer than expected at the start of the year.

A return to the zero or negative-rate environment of the 2010s is not the central assumption in most current medium-term frameworks. Instead, the deposit rate is generally expected to remain in the low-to-mid-2% area, with upside risks if energy shocks, wage growth or fiscal pressures keep inflation above target.

Forecasts are inherently uncertain and may change as new data emerges. Past performance is not a reliable indicator of future results.

Sources: ECB, 11 June 2026; ECB, 11 June 2026.

Implications of ECB interest-rate forecasts

ECB rate decisions can influence borrowing costs, savings rates, bond yields, equity valuations and currency markets. After the June 2026 hike, the focus has moved from a possible 2% plateau to a higher-for-longer environment.

For consumers

ECB policy can feed through to personal finance, although the timing and scale vary by country, lender and product.

• Mortgage rates may remain above pre-pandemic averages, particularly for variable-rate products.
• Savings rates may stay higher than during the ultra-low-rate period, depending on the provider.
• Personal loans and credit card borrowing can move with policy rates, though pass-through is not always one-to-one.

As 2026 has progressed, expectations have shifted away from early-cut scenarios and towards an extended plateau, with the possibility of one further hike. Borrowing costs may therefore stay above their pre-pandemic averages for longer than previously expected, even though current policy rates remain below the 2023-2024 peak.

For businesses

Higher policy rates can affect company borrowing costs, although credit spreads, lending standards and demand conditions also matter.

• Small businesses reliant on bank lending may see tighter credit conditions if rates stay elevated.
• Larger companies may reassess bond-market funding as yields adjust to the expected rate path.
• Construction and real estate businesses can be particularly sensitive to changes in financing conditions.

For traders and investors

ECB rates can influence several markets:

• Equities may react to changes in discount rates, earnings expectations and growth forecasts. Learn how to trade stocks if you’re new to equities.
• Bond yields can move as rate expectations change, with sensitivity varying by maturity and credit risk.
• Forex markets are influenced by interest-rate differentials. With the ECB deposit rate at 2.25%, traders may compare the eurozone rate path with those of other central banks when assessing pairs such as EUR/USD. See the latest euro forecast for more insight into currency movements.

Read our guide to forex trading to explore how rate changes can influence currency pairs.

This market context is for information only and does not constitute investment advice. CFDs are leveraged products and carry risk.

EUR/USD live exchange rate

Past performance is not a reliable indicator of future results. Share prices are indicative and may differ from live market prices.

ECB interest-rate policy: the conclusion

As of 13 July 2026, the ECB’s policy outlook has changed from the start of the year. After holding rates at 2%, 2.15% and 2.4% earlier in 2026, the Governing Council raised all three key rates in June. The deposit facility rate now stands at 2.25%, the MRO rate at 2.4% and the marginal lending facility rate at 2.65%.

In the near term, many forecasts point to policy staying at or slightly above current levels through the rest of 2026. The ECB has made clear that it will decide meeting by meeting, based on incoming data rather than a pre-set path.

Over the medium term, forecasts still centre on a broadly neutral rate environment. However, the June 2026 inflation shock is widely seen as increasing the risk that rates remain mildly restrictive for longer. A low-to-mid-2% deposit rate by the end of the decade appears more consistent with current projections than a return to zero or negative rates, although the path will depend on inflation, growth and financial conditions.

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