What to remember from the interest rate decisions of the BOE, ECB, Norges Bank and Riksbank
The Bank of England (BOE) in the City of London, UK on Monday 15 December 2025.
Bloomberg | Bloomberg | Getty Images
Thursday’s announcement of interest rate decisions by four European central banks went as expected: the European Central Bank, Norges Bank and the Riksbank. maintained their rates, while the Bank of England lowered them.
But there have been hints about what’s in store for 2026. Here are four key takeaways.
1. The BoE voted in favor of the cuts, but narrowly
Markets thought the BoE rate cut was a done deal, with futures markets suggesting a probability of almost 98%. But the vote in favor of a 25 basis point reduction was by the narrowest of margins: 5-4. A number of officials urged caution, citing continued risks to inflation.
Rate-setter Meghan Greene, who was among four opponents of a cut, argued there were signs services inflation was likely to soar, while core goods inflation remained at pre-Covid levels.
Jack Meaning, Barclays’ UK chief economist, told CNBC the bank had made a “hawkish cut”, adding that the bar could be higher for future cuts.
2. ECB projections seem to justify this decision
The ECB’s latest projections appear to have confirmed European officials who said rates were in a “good position”, with improved growth prospects and inflation returning to the 2% target in 2028.
President Christine Lagarde said the euro zone economy was “resilient”, while Al Cattermole, fixed income portfolio manager at Mirabaud Asset Management, said the outlook was “slightly warmer” than expected, and meant the committee would “lean more towards that hawkish side”.
3. But his next move could be a hike
The fact that the ECB left its key rate unchanged came as no surprise to investors, with resilient economic data suggesting rates would remain on pause.
But investors believe that by raising its growth outlook for the euro zone, the bank could have laid the foundations for a future rate hike, as government member Isabel Schnabel suggested.
Schnabel told Bloomberg that she was “pretty comfortable” with the idea that the next move could be a rate hike, “but not in the near future.”
“The dominant narrative is that the cycle of rate cuts has largely come to an end and that Europe’s growth dynamic now lies mainly in fiscal policy. Some even suggest that the ECB could start raising its key rates again by the end of 2026,” noted Kevin Thozet, a member of the investment committee of French asset manager Carmignac.
4. Don’t expect the Riksbank to change rates anytime soon
Sweden’s Riksbank has improved its economic outlook, now seeing growth of 2.9% next year, compared to 2.7% initially forecast.
That reinforced expectations that the central bank won’t change rates anytime soon – with officials forecasting a possible hike after remaining unchanged throughout next year.
Riksbank Governor Erik Thedéen told CNBC that Sweden is in “a pretty good situation” with growth picking up, while SEB chief economist Jens Magnusson said the country has “one of the most promising growth cases for next year.”
