Hold on, we're not hiking

Danske Research Team Danske Bank A/S

We expect the ECB to leave the deposit rate unchanged at 2.0% on Thursday 18 December in line with consensus and market pricing. Data has come in stronger than expected by ECB staff, so we expect an upward revision to the growth forecasts amid inflation little changed. We see the ECB holding rates steady at 2.0% in both 2026 and 2027 due to inflation undershooting in contrast to market expectations of 37 bp worth of hikes. We expect a muted market reaction as Lagarde will likely signal ECB being on hold for a while, reiterating the 'good place' assessment.

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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