Minutes of the September meeting show traders priced 84 basis points of increases through 2027 while surveys pointed to a pause at 2.50%. Several Governing Council members played down near-term increases the same day.
The European Central Bank has two sets of expectations on its desk, and the account of its last meeting puts them side by side.
By the time of the Sep 9, 2026-10 meeting, traders were betting on 84 basis points of tightening through the end of 2027, the account published Thursday shows. In July the figure had been 64 basis points. Analyst surveys, the ECB's own among them, told a different story: one more increase in September and then a hold at 2.50%. The account says the gap could be explained partly by risk premiums built into market prices and partly by the timing of the surveys, and that the difference "warranted further examination."
The ECB raised its deposit rate to 2.50% in September, its second increase this year. Euro-area inflation ran at 3.8% last month, close to twice the 2% target.
The risk assessment
On the outlook, the account shows policymakers agreed that the risks to inflation pointed higher, citing volatile energy prices. The chief economist, Philip Lane, told the meeting that oil stood at $97 a barrel and that European diesel margins were above $70 a barrel, more than three times their prewar level. Brent traded above $104 on Thursday.
The account also treated the rise in long-term yields as part of the policy picture. A repricing at the long end, "provided it remained orderly, also supported the intended monetary policy stance," it said.
Thursday's speakers
Policymakers speaking Thursday mostly emphasized the reassuring side of the data.
Primoz Dolenc, governor of Slovenia's central bank, said "more stable behaviour of core inflation provides some reassurance that broader inflationary pressures remain contained," and that on second-round effects to wages, "we haven't seen that yet." He also said conditions support "moving policy rates towards a more restrictive territory," with timing set meeting by meeting.
Greece's Yannis Stournaras said longer-term inflation expectations remain anchored. "This is good. So we should take this into account and be moderate in our monetary policy," he said. The Dutch central bank's Olaf Sleijpen made the same point on expectations, and Lane, speaking in London, said fiscal support for growth is likely to fade in 2027.
Bonds and the euro
The fiscal side of the story has not gone away. The gap between French and German 10-year yields peaked at 1.58 percentage points late last week. On Thursday, France's 10-year yielded about 4.89% and Germany's about 3.51%, a spread of about 1.38 points.
Germany offered a rare upgrade. Its government doubled its 2026 growth forecast to 1.3% from 0.5% and raised its 2027 forecast to 1.1% from 0.9%. The euro traded near $1.121, up about 0.15%.
The case on each side
One reading follows the market pricing. Policymakers agreed that inflation risks run higher, energy remains elevated and longer-term yields are doing some of the tightening, which keeps further increases live into 2027.
Another reading follows the surveys and Thursday's speakers. Core inflation is steady, wages show no second-round effects, expectations are anchored and fiscal support is fading, which points to a pause at 2.50%.
The October meeting
The ECB's next decision is on Oct 29, 2026. Whether the statement repeats the meeting-by-meeting language or adds guidance will show which set of expectations policymakers are working from. Moody's review of France's rating on Oct 23, 2026 is the next test for the spread.