Economists see ECB hiking to 2.75% in December

A Reuters poll of economists points to the European Central Bank implementing a further interest rate increase in December, which most respondents expect to be the final move of the current cycle. All 71 economists surveyed between November 10 and 12 anticipate a 25 basis point rise in the deposit rate next month, taking it to 2.75%. That level would put policy above the ECB’s recently estimated neutral range of 1.75% to 2.50%, shifting it into territory viewed as at least mildly restrictive for the euro area economy.

Within the poll, 46 respondents, or 65%, forecast that the deposit rate will peak at 2.75% in December. This view reflects confidence that the forthcoming step will be sufficient to address current inflation dynamics if price pressures evolve broadly as expected.

Despite the expectation of a December peak, more than a third of the economists surveyed, 25 out of 71, still project at least one further rate increase. Most of these economists see the additional move occurring in the first quarter of 2027, reflecting concerns that inflation and underlying price pressures may not moderate quickly enough. Markets are currently pricing in two to three ECB rate hikes by the end of next year, signalling that investors also see a risk of further tightening beyond December.

Some economists highlight the risk that core inflation will continue to rise into early 2027, which could prompt the ECB to consider what has been described as an “insurance” hike if price growth fails to ease. For now, however, the central expectation among respondents is that the December decision will mark the end of the current sequence of increases unless inflation surprises on the upside.

The rate expectations are shaped by a recent pickup in inflation and the outlook for energy markets. Euro area inflation climbed to a three‑year high of 4% last month, twice the ECB’s 2% target. Economists have raised their inflation forecasts compared with a month earlier and now see price growth remaining around double the target at least until the second quarter of 2027.

Underlying price pressures are also expected to strengthen, with core inflation projected to rise further. While oil futures prices have fallen by more than 20% in recent weeks, economists warn that this decline may not be a reliable signal of easing inflation. Low natural gas (XNGUSD) storage levels ahead of winter and the possibility of a cold season leave room for renewed spikes in energy prices, which could push inflation higher again.

Resilient economic growth is giving the ECB space to keep tightening policy despite elevated inflation risks. Some economists argue that in an environment where upside inflation risks are viewed as the main threat, policy should move to at least mildly restrictive settings. In this view, a December hike to 2.75% would be consistent with a strategy of erring on the side of caution while monitoring how energy prices and core inflation evolve over the coming quarters.