Berenberg Doesn't See An ECB Rate Hike Until H2 2027

12:35 PM EST, 12/18/2025 (MT Newswires) -- The European Central Bank expects inflation over the next few years to be very close to its 2% target, said Berenberg.

At the same time, growth forecasts have been revised upwards. Holding the benchmark deposit rate at 2% on Thursday was the logical consequence of this assessment, noted the bank.

Although there are numerous risks to the further development of inflation, the ECB currently considers them to be balanced, stated Berenberg. During the press conference, President Christine Lagarde reiterated that the level of uncertainty is too high to provide any forward guidance.

Without any major shocks, the bank doesn't expect the ECB to change its key interest rate for some time. However, President Lagarde admitted on Thursday that wage growth has recently been stronger than the ECB had anticipated.

This supports Berenberg's call that a rebound in eurozone inflation, driven by higher wage growth, will eventually force the ECB to gradually raise its deposit rate from 2.0% to 3.0%. However, the bank believes this will happen in the second half of 2027 rather than in 2026.

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