Economists agree with Schnebel's view: the next step for the European Central Bank will be to raise interest rates.

Economists predict that the next move in interest rates by the European Central Bank will be a hike, in line with the views of investors and influential Executive Board member Isabel Schnabel, as inflation remains stable at around 2%. In a survey, over 60% of respondents said that officials are more likely to raise rather than lower borrowing costs - a significant shift as in October, only a third of respondents held this view. However, they do not believe this will happen quickly: it is expected that the deposit rate will remain unchanged at 2% on December 18 and for the next two years. Economists believe that the European Central Bank has stopped lowering interest rates After inflation stabilizes and the eurozone economy withstands the test of global trade tensions and geopolitical turmoil (performing better than expected), analysts are revising their forecasts. Schnabel cited this resilience - and the brighter prospects fueled by government spending - as one of the reasons she feels "quite confident" betting on a rate hike next time in an interview. An indicator points to the first rate hike possibly happening in the second half of 2027. Most Governing Council members simply stated that the rates are currently at a "suitable level". Jan von Gerich, Chief Strategist at NordLB, believes that for ECB President Christine Lagarde, the task will be to reflect both their confidence in the weakening economic risks and not fuel the idea that a rate hike is imminent. Others share the same view. Paul Hollingsworth, Chief European Economist at BNP Paribas, said, "The biggest challenge is in communication, especially against a backdrop of rapidly evolving market expectations." Hollingsworth and von Gerick both predict that the ECB will raise rates by 25 basis points in September and December 2027, respectively. If traders bet on faster action, tighter financing conditions will pose a headwind to the economy - which happens right when economic recovery is expected. Eurozone economic prospects stabilize In fact, survey respondents believe that the ECB's new quarterly forecasts to be released next week will outline brighter growth prospects - something Lagarde herself has hinted at. In terms of inflation, concerns for 2027 persist, with the delay of the EU's new carbon pricing system likely to create pressure. However, most economists expect the ECB's forecast of a 1.9% increase in prices for the year to be maintained in September. Then, attention will turn to 2028 - a year that will appear in forecasts for the first time. Survey results show that the forecast is slightly higher than the ECB's 2% target, making nearly two-thirds of analysts more concerned about the target being exceeded in the medium term rather than falling short. Expectations for eurozone inflation to exceed the 2% target in 2028 Even those who believe that price pressures will significantly weaken in three years do not think that alone is enough to trigger another rate cut. Dennis Shen, Chief Economist at Scope Economics, said, "Given the relatively balanced inflation risks, the ECB should consider the current rate setting to be appropriate. We do not expect any further rate cuts in 2026, but the ECB will maintain its chosen openness." Shen believes that one reason for maintaining flexibility is the possibility of the Fed further cutting rates next year. The Fed has cut rates for the third consecutive week and may cut rates again in 2026. However, Kevin Hassett, a potential successor to Chairman Jerome Powell, believes there is "plenty of room" for more significant moves. Economic experts David Powell and Simona de la Saes said, "While the ECB seems reluctant to cut rates again, our view is that the risks to our prediction of unchanged rates lean downward. We believe the central bank underestimates the threat of US tariffs to the region's economy." US policies - whether monetary or trade policies - are still seen as the most significant threat to the eurozone, while tensions in Ukraine remain a major concern. Against this backdrop, Norlys Machulis, Chief Economist at the Swedish Central Bank, expects the ECB to cut rates again in March, believing that the optimistic sentiment about the region's growth prospects is "based on fragile foundations". "Unless we are talking about hiking along the scenic trails of the Alps, Governing Council members are unlikely to hike rates quickly," he said. US policy remains the biggest risk, concerns about the situation in Ukraine intensify However, about 45% of respondents believe that economic growth is primarily constrained by structural forces that the ECB cannot control. These forces include intensified competition from China leading to weakness in manufacturing, high energy costs, and excessive bureaucracy. Nearly half of respondents say that these obstacles are as severe as cyclical drag factors, explaining why policymakers are expected to remain patient before considering further rate cuts - even if economic growth fails to meet expectations. Karsten Brzeski of ING Group said, "Monetary policy cannot solve structural growth problems." He expects officials to remain on hold at least until 2027. "A 25 basis point rate cut by the ECB will not make the German automotive industry more competitive when facing China."