ECB: Rates seen unchanged through 2026 – Nordea

Nordea’s Ole Håkon Eek-Nielsen and Jan von Gerich note that the ECB remains relaxed about lower inflation and FX moves, and is firmly on hold. They keep their call for no ECB rate changes this year and see the next move as a hike in the second half of 2027, with risks near term still tilted slightly towards a cut.

Central bank firmly on extended hold

"The February ECB meeting did not bring any major surprises. The central bank sounded relaxed about the recent fall in inflation to below 2% and the moves in the FX market, and rather emphasized the resilience of the economy while listing factors currently supporting the economy. The message was one of a central bank firmly on hold, and gave no reason to question our call of no rate changes from the ECB this year."

"We continue to think the next move in rates will be a hike, but not before the second half of 2027."

"While the resilience of the economy has indeed been remarkable, while positive signs finally appear to have spread to the German manufacturing sector as well, in a sense of thinking about the probability of rate changes in the next six months, we continue to think that the odds of a cut – though not particularly large – are still higher than the odds of a hike."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)