European Central Bank publishes July survey showing analysts expect no immediate rate change and a 25 basis point DFR increase by the second meeting

The European Central Bank published the aggregated results of its July 2026 Survey of Monetary Analysts, based on 70 respondents, showing a median expectation that the deposit facility rate will remain at 2.25% at the next Governing Council meeting and then rise to 2.50% from September 2026 through April 2027. The median path then points to a move back to 2.25% by June 2027 and to 2.00% in the long run. The survey’s probability distributions show 89.4% average odds of no DFR change at the first of the next two meetings and 56.3% odds of a 25 basis point increase at the second. On the macroeconomic outlook, respondents expect euro area real GDP growth to remain modest at 0.2% to 0.3% quarter on quarter through 2029, while the unemployment rate stays around 6.3% to 6.4% before edging down to 6.2%. Median HICP inflation is seen at 3.0% in 2026Q4, falling to 2.0% from 2027Q2 onward, while HICP excluding food and energy declines more gradually to 2.0% by 2028Q4. Growth risks were tilted to the downside for 2026, inflation risks to the upside for 2026 and 2027, and long-run inflation expectations remained concentrated around the 1.9% to 2.1% range. The survey also points to continued declines in Eurosystem bond holdings. Median APP holdings fall from EUR 2,216 billion at end-2026 to EUR 1,393 billion in 2029, while PEPP holdings decline from EUR 1,320 billion to EUR 846 billion over the same period. Respondents assigned a 56.5% average probability to the Transmission Protection Instrument never being activated, and expected refinancing volumes to rise gradually, with median outstanding MRO and LTRO amounts reaching EUR 50 billion and EUR 70 billion respectively by end-2029.