In a recent survey conducted by Bloomberg, analysts predict that the European Central Bank will continue to reduce borrowing costs further, with two more rate cuts expected. While interest rates are not anticipated to drop below 2%, consecutive cuts are likely to occur in April and June following six previous reductions. However, the deposit rate is projected to stabilize at 2% by the end of the survey period, diverging from earlier expectations of a decrease to 1.75% by March 2026.

The change in analyst perspectives is influenced by European governments' plans to increase spending on defense and infrastructure, aiming to rejuvenate economic growth and potentially fuel inflation. Economists foresee these investments as contributors to rising inflationary pressures by late 2026. Some experts believe that the ECB may need to halt further rate cuts and eventually consider raising rates again, while others suggest that easing measures may continue.

Market sentiments have shifted, with reduced expectations of monetary policy easing this year, with only one or two cuts anticipated including a potential pause in April. Despite uncertainties surrounding tariff threats, analysts foresee gradual economic growth within the euro-zone, aligning with the ECB's growth projections. Pending approval of fiscal spending packages for Germany and the EU could bolster economic expansion, while the looming threat of tariffs poses a downside risk.

Projections for inflation rates between 2025 and 2027 indicate a slight uptick compared to previous estimates, with forecasts of 2.2%, 2.0%, and 2.1% over the respective years. These predictions suggest a moderate acceleration in inflation over the forecast period, influenced by various economic factors and policy decisions in the region.