According to Zhitong Finance, the latest survey shows that the European Central Bank is expected to maintain the current interest rate level at least until the end of next year, and market expectations for an interest rate hike in 2026 have somewhat receded.
The interviewed economists unanimously predict that when the European Central Bank’s Governing Council convenes a monetary policy meeting in Frankfurt from February 4 to 5, it will keep the deposit rate at 2%.
Although the proportion of economists expecting the central bank to initiate one or more interest rate hikes before 2028 has risen from about a quarter in the previous round of surveys to one-third in this survey, the percentage of respondents who believe there will be a rate increase within the year has actually declined.
Behind this shift in perspective is the continuous rise in economic uncertainty: U.S. President Trump has signaled that he may tear up the trade agreement signed with Europe last summer at any time, while the strengthening euro has also suppressed Eurozone exports, further dragging down price movements that are already below the inflation target.
European Central Bank officials, led by Governor Lagarde, believe that the current monetary policy framework is sufficient to address various future challenges. However, due to the continued appreciation of the euro, officials such as Martin Kocher, governor of the Austrian National Bank, have emphasized that the central bank must be prepared to act swiftly.
Nerijus Maciulis, an economist at Swedbank, stated: “Lagarde will most likely reiterate that the Eurozone economy’s fundamentals remain robust overall, but risks remain high. In the first few weeks of 2026, the fragility of various trade agreements has become evident.”
Trump threatened at the World Economic Forum that if Europe does not hand over Greenland to the United States, higher tariffs would be imposed, prompting surveyed economists to conclude that geopolitical tensions have now reached their highest level in at least two years.
Although Trump subsequently made concessions, this incident has also driven European countries to accelerate efforts to consolidate partnerships with other regions. After signing trade agreements with multiple South American countries earlier this month, Europe reached a free trade agreement with India this week.
Gavin Friend, Senior Market Strategist at National Australia Bank, stated: “Although we expect the EU-U.S. trade agreement will ultimately be retained, it may come close to breaking down several times in the future.”
Friend is one of the 76% of economists who predicted last summer that the agreement would withstand the latest turmoil. Regarding the strengthening of the euro, he believes that an exchange rate between 1.20 and 1.25 against the US dollar falls within the ‘acceptable range’ for the European Central Bank.
Influenced by overseas investors’ cautious stance on the economic outlook of the United States, the euro has appreciated by about 15% against the US dollar over the past year, recently breaking through the 1.20 mark. Although policymakers at the European Central Bank have not yet issued warnings, they are keeping a close eye on developments.
Ilias Tsirigotakis, an economist at the National Bank of Greece, stated: ‘Although a significant depreciation of the US dollar remains a low-probability extreme event, if the euro continues to appreciate, the European Central Bank will have to reassess the risk balance of inflation in the Eurozone.’
The latest economic forecast from the European Central Bank indicates that consumer price growth in the Eurozone will remain slightly below the 2% target in 2026 and 2027, only returning to this target level by 2028. Economists surveyed believe that downside risks to inflation in the Eurozone are more pronounced in the coming months, with upside risks increasing somewhat by 2027; however, inflation remains broadly on track toward its medium-term target.
Even so, traders have increased their bets on interest rate cuts by the European Central Bank within the year. In this survey, only 12% of respondents predict that the central bank will implement one or more rate cuts before the end of 2027, but approximately 40% of scholars believe that the likelihood of rate cuts remains higher than that of rate hikes.
Economists David Powell and Simona Delle Chiaie stated: ‘At the start of 2026, Europe encountered multiple geopolitical disturbances, but the European Central Bank will continue to focus on economic fundamentals rather than short-term fluctuations. This implies that the central bank is likely to downplay the impact of the Greenland-related trade dispute, inflation falling slightly below the 2% target, and the appreciation of the euro. Nevertheless, these developments also underscore that downside risks to the Eurozone’s economic outlook are steadily accumulating.’
Hopes for economic growth in the Eurozone rest on large-scale fiscal stimulus from increased infrastructure and defense spending by member states. Economists surveyed predict that Germany will benefit more from such investments than the Eurozone as a whole.
As the largest economy in the Eurozone, Germany’s recent economic performance has consistently lagged behind other member states, only recently returning to a growth trajectory. Preliminary GDP data for Q4 2025 in the Eurozone will be released later this Friday, with analysts expecting quarter-on-quarter growth of 0.2% for the Eurozone during this period.
Most economists surveyed believe that structural factors primarily constrain current economic output in the Eurozone—a marked shift from the previous academic consensus that cyclical factors were dominant.
Carsten Brzeski, an economist at ING Groep, stated: ‘The European Central Bank will increasingly emphasize that monetary policy has limited effectiveness in addressing structural economic weaknesses, aiming to quell market speculation about rate cuts. Against the backdrop of a complex and volatile global landscape, the European Central Bank has almost become a benchmark for policy continuity.’