ECB Rate Cut Cycle May Be Over with Possible Rate Hikes in H2 2026, A Bloomberg Survey Shows

TradingKey - The eurozone’s August CPI came in above the European Central Bank’s (ECB) target, and the rebound in inflation — combined with resilient economic data — has not only solidified expectations that the ECB will hold rates steady at its September meeting, but also intensified debate over whether this easing cycle has ended. A Bloomberg survey shows economists now expect no further cuts in 2025, and a significant chance of rate hikes in the second half of 2026.

From June 2024 to June 2025, the ECB cut interest rates at eight consecutive monetary policy meetings. It paused in July. With August CPI rising to 2.1%, above the ECB’s 2% target, and multiple indicators showing the eurozone economy remains robust despite U.S. tariff risks, another hold in September is now all but certain.

The current debate centers on how the ECB should balance inflation and growth risks as the impact of U.S. trade tensions continues to unfold.

According to the latest Bloomberg survey:

• All economists expect the ECB to hold rates steady in September, keeping the deposit rate at 2.0%
• 65.1% expect no change in December
• About a quarter anticipate one or more rate hikes between June and December 2026

In other words, most economists believe the ECB will deliver a “triple hold” after its “eight consecutive cuts.”

While not a majority, over two-fifths of respondents still expect the ECB could cut rates once by end-March 2026, depending on economic conditions.

Luca Mezzomo, Head of Macroeconomic Research at Intesa Sanpaolo, said ECB policymakers can afford to wait and see, but weak domestic demand and new external shocks could still prompt another rate cut later.

Mezzomo expects underlying inflation to ease gradually, potentially justifying a rate cut in December 2025. After the August CPI report, Nomura said inflation in the eurozone should remain stable around 2% for the rest of the year.

On the question of whether inflation will be above or below 2%, both economists and ECB officials are split roughly 50-50. Their consensus is clear: the bar for further rate cuts is now high.

Bloomberg economists noted the ECB is in no rush to cut again, as the economy has shown resilience against higher U.S. tariffs and underlying inflation has not declined to the extent policymakers hoped. With the latest U.S.-EU tariff agreement offering little relief, the impact of tariffs will become more visible in the coming months.

For more dovish observers, fiscal challenges, geopolitical risks, and U.S. policy remain major threats to the eurozone economy.

Most agree the ECB will remain cautious and avoid confirming that rates have reached their low point. But the longer it maintains this stance, the more the market will believe rates have bottomed out.

HSBC said that as markets turn increasingly hawkish, the ECB’s challenge will be to stay data-dependent, minimize forward guidance, and maintain a dovish policy bias — which could help dampen expectations of rate hikes as early as 2026.