Nordea expects the European Central Bank to raise its deposit rate three more times, in September, December and March 2027, lifting it to 3 percent. The forecast rests on the central bank’s continued focus on upside inflation risks, as reflected in the account of its July meeting, and assumes a quarterly cadence of 25 basis-point moves unless price pressures accelerate sharply.
July account reinforces tightening bias
The published account of the July gathering shows policymakers remained primarily concerned that inflation could prove stickier than projected. Unless the outlook improves materially, the document signals that further increases will be necessary. Nordea’s Jan von Gerich reads this as a clear indication that the governing council is not yet ready to pause.
Second-round effects still absent
Wage and price-setting behaviour has not yet shown the kind of feedback loop that would force a faster pace. That absence gives officials space to move in measured steps, consistent with the quarterly rhythm Nordea anticipates. The risk, in the bank’s view, is skewed toward fewer hikes rather than more.
Pre-emptive scenario remains live
Officials noted that pre-emptive action could be warranted if inflation expectations become unanchored, underlying price pressures pick up clearly, or firms start adjusting prices at an unusually rapid clip. Any of those developments would argue for a more aggressive sequence than the baseline three hikes currently pencilled in.