The European Central Bank published an ECB Blog post analysing the sharp steepening of the euro area yield curve in 2025, marked by broadly unchanged short-term risk-free rates but significantly higher long-term and especially very long-term rates. The post argues that most of the steepening reflected an increase in the real component of rates, while inflation expectations remained broadly stable. On the euro area risk-free curve based on overnight index swaps referencing the euro short-term rate, the ten-year rate rose by more than 40 basis points and the 30-year rate by around 90 basis points, steepening both the two-to-ten-year and ten-to-30-year segments. The move followed a period of inversion linked to the 2022 onwards rise in the ECB’s short-term policy rates and brought the curve closer to its longer-run average shape. Looking at drivers, the analysis finds an unusually strong global component behind the steepening, particularly at the very long end, but notes that euro area sovereign curves did not move uniformly. Germany and France saw larger steepening than Italy and Spain, and changes in borrowing costs tracked changes in country debt outlooks based on European Commission debt-to-GDP projections for 2026, suggesting euro area-specific factors also mattered alongside global forces.
European Central Bank 2026-01-16
European Central Bank examines 2025 euro area yield curve steepening as 30-year risk-free rate rose about 90 basis points
The European Central Bank's blog post analyzes the sharp steepening of the euro area yield curve in 2025, driven by an increase in the real component of rates while inflation expectations remained stable. The analysis highlights a strong global influence on the steepening, particularly at the long end, with variations across euro area sovereign curves linked to country-specific debt outlooks.