Markets Now Expect European Central Banks to Hold Rates Steady

Expectations around European interest rates have shifted quite a bit. Traders are increasingly betting that the rate-cutting cycle across Europe is mostly done. The current market pricing suggests that the European Central Bank also Sweden’s Riksbank and the Norway’s central bank are all likely to keep the rates unchanged at their upcoming meetings and potentially hold them steady through the end of the 2026.

Even in the UK where a rate cut is still expected but markets only fully price in one more cut next year. This is a big change from earlier in the year, when investors were expecting multiple cuts across Europe before 2026. The Swiss National Bank, which moved early with rate cuts, has already paused with rates sitting at zero.

The general view now is that policy rates are no longer restrictive, and in some cases, attention is even shifting toward the possibility of future hikes rather than more cuts.