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

As the primary monetary authority for the 20 nations that use the euro, the European Central Bank (ECB)’s decisions have far-reaching implications. One of its most influential tools is the setting of benchmark interest rates, which help manage inflation and support broader economic stability across the bloc.

ECB interest-rate predictions are closely monitored by investors, policymakers, corporations, and households. These forecasts can be used to inform financial planning, risk management, and budgeting decisions. As we look ahead to the next five years, understanding how the ECB might act (and why) remains relevant when assessing the euro-area’s economic outlook.

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Understanding ECB interest-rate decisions

ECB interest-rate decisions are shaped by a range of macroeconomic factors. Chief among them is inflation: the ECB’s primary mandate is to maintain price stability, defined as an inflation rate of 2% over the medium term. When inflation is too high, the ECB may raise rates to dampen demand and borrowing. When inflation is low or economic momentum weakens, it may cut rates to support activity.

Beyond inflation, the ECB considers other indicators such as GDP growth, unemployment, wage trends, fiscal policy, geopolitical risks, and global economic dynamics. The overarching goal is to balance inflation control with sustainable economic conditions.

The ECB uses three key policy rates to guide monetary conditions:

• Main refinancing operations (MRO) rate: this is the rate at which banks borrow from the ECB for one week. It serves as a benchmark for short-term borrowing costs.
• Deposit facility rate: the interest paid on reserves parked by banks overnight at the ECB. It often acts as a floor for interbank rates.
• Marginal lending facility rate: the rate for overnight borrowing from the ECB, setting a ceiling for short-term money-market rates.

Historically, the ECB’s rates have fluctuated in response to crises and recoveries. During the global financial crisis and the European sovereign debt crisis, rates were cut to record lows. In 2014, the ECB introduced negative interest rates. The tide began to turn in 2022 as inflation rose sharply following the pandemic and energy-related shocks. A series of rate hikes followed, marking the most aggressive tightening cycle in the ECB’s history.

Current economic climate and ECB monetary policy

As of early 2026, the ECB faces a more balanced, but still data-dependent, macroeconomic backdrop. Euro-area inflation has eased close to the ECB’s 2% target, with the flash estimate at 2.0% in December 2025, down from 2.1% in November (European Commission, 7 January 2026).

Growth has remained subdued but positive. In its 18 December 2025 decision, the ECB noted that inflation should stabilise at the 2% target over the medium term, while staff projections put growth at 1.4% in 2025 and 1.2% in 2026. Against that backdrop, policy rates are no longer at their 2024 peak. After a sequence of reductions, the ECB has held rates steady for several meetings, with the deposit facility rate at 2.00%, the MRO rate at 2.15%, and the marginal lending facility rate at 2.40% (European Central Bank, 18 December 2025).

Operationally, the ECB also changed the way it sets the corridor between rates: since September 2024, the spread between the MRO rate and the deposit facility rate has been fixed at 15 basis points, with the marginal lending facility kept 25 basis points above the MRO rate (European Central Bank, 13 March 2024).

Projected ECB interest-rates in 5 years

Wondering about projected ECB interest rates in five years? While no forecast is set in stone, economists, markets, and policymakers continue to track likely trends in euro-area monetary policy. The ECB’s future decisions will depend heavily on inflation, growth, and broader financial conditions. Compare projected US interest rates to see how differences in policy can affect global markets.

Below, we explore projected interest rates 2026 for the ECB, what third-party analysts expect in the short term, and what might shape rates through 2030.

Short-term ECB interest-rate projections (next 12-24 months)

Instead of debating when cuts might start, most near-term forecasts now focus on how long the ECB keeps policy around current levels.

Other sources describe a similar 'plateau' view:

• Bloomberg survey respondents expected the ECB to keep the deposit rate at 2.00% through 2027 (Bloomberg, 18 December 2025).

• Capital Economics has argued that changes in early 2026 look 'extremely unlikely', while characterising cuts as more likely than hikes later in 2026, subject to incoming data (Capital Economics, `8 December 2025).

Taken together, current consensus points to a deposit rate that remains close to 2.00% in 2026, with forecasts ranging from no change to only modest easing by the end of the year.

Medium-term ECB interest-rate outlook (3-5 years)

Over the medium term, forecasts become more uncertain, but many projections converge on a 'neutral' zone where rates neither strongly stimulate nor restrict the economy. In practice, this often maps to a 2.0% to 2.5% range for the deposit facility rate, with debate centred on whether the trend ultimately drifts slightly lower, if disinflation dominates, or slightly higher, if inflation proves more persistent.

This profile is consistent with a baseline in which rates remain close to current levels before edging modestly higher toward the end of the decade, rather than returning to the ultra-low environment of the 2010s.

Predictions and third-party forecasts are inherently uncertain, as they cannot fully account for unexpected market developments. Past performance is not a reliable indicator of future results.

Implications of ECB interest-rate forecasts

ECB interest-rate decisions can influence borrowing costs, savings rates, and asset valuations across the eurozone. After rates have moved back towards 2.00%, the focus shifts from the impact of further easing to what a period of stable policy may imply for different parts of the economy.

For consumers

The ECB’s rate decisions can feed through to personal finance, although the timing and scale vary by country and product.

• Mortgage rates may be lower than during the 2023–2024 peak, particularly for variable-rate products, though pricing also reflects bank funding costs and local competition.
• Savings rates may also be lower than at the peak, depending on the provider and product structure.
• Personal loans and credit card borrowing can move with policy rates, though pass-through is not always one-to-one.

As the ECB is likely to cut rates gradually, consumers can expect a slow return to more manageable borrowing costs – but not the ultra-low rates of the 2010s.

For businesses

Lower policy rates can reduce borrowing costs for companies, although credit spreads, lending standards, and demand conditions remain influential.

• Small businesses reliant on bank lending may see changes in credit availability as rates stabilise.
• Larger corporations may reassess bond-market funding as yields adjust to expected rate paths.
• Construction and real estate sectors can be particularly sensitive to shifts in financing conditions.

For traders and investors

ECB rates can influence multiple markets:

• Equities may react to changes in discount rates and growth expectations. Learn how to trade stocks if you’re new to equities.
• Bond yields can move as rate expectations evolve, with sensitivity varying by duration and credit risk.
• Forex markets are influenced by interest-rate differentials and expectations. With the ECB at 2.00%, attention often turns to how other central banks’ paths compare 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.

EUR/USD live exchange rate

Past performance is not a reliable indicator of future results.

ECB interest-rate policy: the conclusion

The next five years, as of January 2026, are expected to reflect a different phase in the ECB’s policy cycle compared with 2022–2025. After moving down from peak levels, policy rates are now held at 2.00% for the deposit facility, 2.15% for the MRO, and 2.40% for the marginal lending facility, with the ECB continuing to emphasise a meeting-by-meeting, data-dependent approach.

In the near term, many economist surveys suggest a steady-rate outlook through 2026, while market pricing and some forecaster benchmarks indicate limited scope for further cuts from current levels.

Over the medium term, projections cluster around a broadly neutral rate environment, with some scenarios allowing for a modest drift higher towards around 2.25% by 2030, should inflation remain close to target and growth conditions stabilise.

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