---
title: "ECB December Meeting Preview: No Rate Cuts! Will There Be Rate Hikes in 2026?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/269977916.md"
description: "The European Central Bank will announce its interest rate decision on December 18, with the market expecting it to remain unchanged at 2%. There are differing views on the interest rate path for 2026; Citigroup expects it to remain until the end of 2027, while Morgan Stanley predicts a drop to 1.50% in the first half of 2026. The euro against the US dollar is influenced by interest rates, with Morgan Stanley forecasting it to rise to 1.30, while Citigroup believes it will fall to 1.10 in the third quarter of 2026"
datetime: "2025-12-16T08:14:58.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/269977916.md)
  - [en](https://longbridge.com/en/news/269977916.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/269977916.md)
---

# ECB December Meeting Preview: No Rate Cuts! Will There Be Rate Hikes in 2026?

Investment Insights - Institutions' Views on the ECB's 2026 Interest Rate Path Diverge, This Rate Decision May Reveal Clues.

On December 18, the European Central Bank (ECB) will announce its interest rate decision. The market generally expects it to keep the deposit facility rate unchanged at 2%, marking the fourth pause in rate cuts this year.

The focus will then shift to President Lagarde's speech and the latest quarterly forecasts to seek clues about the 2026 path.

\[Source: Tradingeconomics; Eurozone interest rates over the past 3 years\]

In 2026, will there be a rate hike or a rate cut?

After hawkish comments from ECB officials, the latest overnight index swaps (OIS) show that the market has completely ruled out the possibility of a rate cut by the ECB in 2026 and has even begun to bet on a rate hike in 2026.

Citigroup expects the ECB to keep the rate unchanged at 2% until the end of 2027.

However, Morgan Stanley believes that the market is underestimating the pressure for further rate cuts by the ECB. Weak growth, inflation below target, and limited fiscal stimulus will force the ECB to ease further. It predicts that the ECB will lower the deposit rate to 1.50% in the first half of 2026 and maintain it.

Analysts point out that if the ECB revises its economic growth expectations upward this week, and President Lagarde expresses optimism about the Eurozone's economic growth prospects and inflation trends again, the market will continue to reinforce that the ECB has ended its current rate-cutting cycle.

What will be the future trend of the euro exchange rate?

Morgan Stanley states that if the ECB maintains interest rates next year, the euro against the US dollar (EUR/USD) could soar to 1.30, reaching a ten-year high.

Even if the ECB cuts rates, the euro against the US dollar may still rise to 1.23, as the Federal Reserve is expected to continue cutting rates, putting pressure on the dollar.

However, Citigroup believes that the euro against the US dollar will fall to 1.10 in the third quarter of 2026 before rebounding. The reason is that the dollar will benefit from a renewed acceleration in US economic growth, and the Federal Reserve's rate cuts may be less than the market expects

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