Reuters poll: Economists agree ECB will raise rates to 2.75% in December

Expectations of a December rate increase by the European Central Bank (ECB) are unanimous among the 71 economists surveyed in a Reuters poll released on Thursday. They forecast a 25 basis point rise in the deposit rate to 2.75% next month. While 46 economists believe 2.75% will mark the peak, the remaining 25 anticipate a further increase, most likely in the first quarter of 2027.

Eurozone inflation is now forecast to stay at roughly twice the ECB’s 2% target until at least the second quarter of 2027, following upward revisions by economists to their projections from a month earlier.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Compared with the October poll’s estimates of 3.0% for 2026 and 2.6% for 2027, economists now project average inflation of 3.1% and 2.8%, respectively. They also anticipate an acceleration in core inflation, with an average of 2.6% this quarter followed by 2.8% in the first quarter of 2027.

Alongside these revisions, economists have upgraded their growth projections for the Eurozone. The economy is now forecast to grow by 1.1% in 2026 and 1.3% in 2027, compared with the respective estimates of 1.0% and 1.2% in the October poll.

ECB: Common Questions

How does the ECB operate and influence the Euro?

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, determining interest rates and conducting monetary policy across the region. Maintaining price stability is the ECB’s primary mandate, which entails keeping inflation close to 2%. Adjusting interest rates upwards or downwards is its main means of meeting this objective. The Euro generally strengthens when interest rates are relatively high, while the reverse is usually true when rates are relatively low. Monetary policy is decided by the ECB Governing Council, which meets eight times a year. The decision-makers comprise the heads of the Eurozone’s national banks and six permanent members, among them ECB President Christine Lagarde.

How does Quantitative Easing (QE) work and influence the Euro?

When conditions become extreme, the European Central Bank may deploy Quantitative Easing as a policy instrument. Under QE, the ECB prints Euros to purchase assets from banks and other financial institutions, typically government or corporate bonds. The Euro usually weakens as a result. Used as a last resort, QE is adopted when interest rate cuts alone are unlikely to deliver price stability. The ECB deployed the policy during the Great Financial Crisis in 2009-11, again in 2015 as inflation persisted at low levels, and during the COVID pandemic.

How does Quantitative tightening (QT) work and influence the Euro?

Once an economic recovery is under way and inflation begins to rise following QE, central banks undertake its reverse, Quantitative tightening (QT). Under QE, the European Central Bank (ECB) supplies liquidity to financial institutions by purchasing government and corporate bonds. QT, by contrast, involves halting further bond purchases and ceasing to reinvest the principal received as existing bond holdings mature. This is generally supportive, or bullish, for the Euro.