Reuters poll: 71 economists expect ECB to raise rates to 2.75%
Key Facts
The 71 economists surveyed by Reuters between November 10 and 12 expected the European Central Bank to raise its deposit rate to 2.75% in December, in a consensus for a move following increases in June and September. The expected step would lift the rate from its official level of 2.50%, in effect since September 16, while the Governing Council left key rates unchanged at its October 29 meeting. The consensus does not settle the policy path after December: most participants saw the increase as the last, while others expected tightening to continue. The poll comes as energy-related inflation risks intensify and the bank's decisions remain dependent on incoming data. The bank has reaffirmed that its medium-term target is inflation at 2%.
Forty-six of the 71 economists expected the deposit rate to peak at 2.75% in December, while 25 saw the bank raising it again, most likely in the first quarter of 2027. Fabio Balboni said a March increase remained a "50/50" possibility, and expected core inflation to keep rising through that month. He added that the bank might prefer to act preemptively, reflecting the view among some economists that price risks could warrant extending the tightening cycle. By contrast, most economists did not include another increase in their baseline forecasts. Markets are pricing in two to three increases by the end of 2027, according to Reuters.
Economists expected core inflation to average 2.6% in the fourth quarter of 2026, then 2.8% in the first quarter of 2027, after it came in at 2.2% in October. Estimates for both quarters were above those in the previous month's poll, reinforcing concerns that price pressures will persist after the measure rose faster than headline inflation. The Reuters report linked the risks to energy costs and their second-round effects, as well as lower gas inventories ahead of winter. It cautioned against drawing too much comfort from the more than 20% decline in oil futures in the weeks before the poll was published, given continued exposure to gas and energy risks. That puts core inflation expectations at the center of the debate over when the bank will stop raising rates.
At her press conference after the October meeting, ECB President Christine Lagarde said the council had discussed raising rates but unanimously decided to wait for more information before making a decision. The data awaited included new staff projections, two inflation readings and third-quarter GDP data. The bank also kept its key rates at 2.50% for deposits, 2.65% for main refinancing operations and 2.90% for the marginal lending facility. Lagarde said the euro zone economy continued to expand in the third quarter, although higher energy prices had weakened consumer confidence. The unemployment rate stood at 6.4% in August, while the bank expected negotiated wage growth to range between 2.5% and 2.8% during the remaining months of 2026, averaging 2.6% in the first three quarters of 2027.
Participants raised their growth forecasts to 1.1% in 2026 and 1.3% in 2027, from 1.0% and 1.2% in the October poll. The improvement in economic activity forecasts is matched by higher core inflation estimates and energy risks, leaving the bank to balance bringing inflation back to its target against avoiding a drag on growth. The picture for prices and activity will become clearer as the data flagged by the bank are released ahead of the December meeting. The Governing Council will hold its monetary policy meeting in Frankfurt on December 16 and 17, with a press conference following the second day's meeting. The bank also published its seventh Economic Bulletin of 2026 on November 12, as part of its schedule of 8 publications a year, two weeks after each monetary policy meeting.