Holger Schmieding: The European Central Bank's deposit rate is expected to reach 3% by mid-2029

Berenberg Bank analyst Holger Schmieding stated that the European Central Bank's deposit rate is expected to reach 3% by mid-2029, compared to the current rate of 2.25%. With the temporary US-Iran agreement reducing energy costs, the overall eurozone inflation rate is projected to fall below 2% in early 2027. The European Central Bank is expected to delay interest rate hikes until the end of 2028. Holger Schmieding noted that by then, Europe’s aging population will cause the labor supply to shrink faster than demand, pushing up wages and forcing the central bank to raise interest rates.