EUR Rates: Short End Settles As Rest Of The Curve Drifts Higher
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ING Economic and Financial Analysis4.95K FollowersFollow5ShareSavePlay(5min)CommentsSummaryWhilst the front end of the swap curve remains relatively anchored as the ECB stays on hold, longer rates should still drift higher in 2026 on an improving growth outlook.German spending ambitions won’t bring stellar growth, but will reduce the risk of a return to secular stagnation, helping the 10Y swap rate to 3%.Inflation is settling nicely and the growth outlook continues to show a careful but gradual recovery. kontekbrothers/iStock via Getty Images By Michiel Tukker, Senior European Rates Strategist The ECB has landed, but the back end of the curve has not Markets are increasingly convinced that the ECB’s policy rate will remain at 2%, and we tooThis article was written byING Economic and Financial Analysis4.95K FollowersFollowFrom Trump to trade, FX to Brexit, ING’s global economists have it covered. Go to ING.com/THINK to stay a step ahead. We’re sorry we can’t reply to individuals' comments.Content disclaimer: The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.This publication has been prepared by ING solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. For our full disclaimer please click here.Quick InsightsHow does Germany's fiscal policy impact long-term euro rates?Germany's €1tr spending plan over the next decade is a key driver pushing 10Y EUR swap rates higher, with a 3% target for 2026.What scenarios could cause the ECB to cut rates below 2%?If eurozone growth stagnates and inflation undershoots, the ECB could cut rates toward 1%, halt QT, and see 10Y swap rates fall to 1.5–2%.What is the upside scenario for euro rates through 2027?If growth and inflation remain resilient, the ECB could hike to 3% by end-2027, with 10Y swap rates potentially reaching 3.6%.Recommended For You