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Reserve Bank of India (RBI) | National Payments Corporation of India (NPCI)
The December 2025 ECB Survey of Monetary Analysts (SMA) reflects a consensus on interest rate stability, with 70 respondents projecting the Deposit Facility Rate (DFR) to remain at 2.00% through much of 2026. While the ECB held rates steady in December, the survey indicates that analysts see the current cycle as potentially having reached its neutral level.
Rate Outlook: Median expectations for key rates—DFR (2.00%), MRO (2.15%), and MLF (2.40%)—remain flat for the next several quarters, with a long-run DFR anchor also at 2.00%.
Inflation & Growth: Analysts attach a 90% probability to 2025 inflation being above 2%, but this shifts significantly for 2026, where a 60% probability is assigned to inflation falling below the 2% target. Real GDP growth is expected to remain modest, projected at 0.2% to 0.4% per quarter through 2028.
Balance Sheet Normalisation: The Eurosystem’s stock of bonds under the Asset Purchase Programme (APP) is expected to decline from €2,545 billion in late 2025 to approximately €744 billion by 2033.
Risk Assessment: For 2026, analysts see “downside” risks to growth (35.3%) and a notable “downside” risk to inflation (55.9%), suggesting concerns over economic stagnation.
What is the Deposit Facility Rate (DFR)? The DFR is one of the three interest rates the ECB sets every six weeks as part of its monetary policy. It defines the interest banks receive for depositing money with the central bank overnight. In the current “floor” system, it acts as the primary tool for steering the overnight market interest rate (€STR).
Policy Relevance
The ECB’s steady-state stance contrasts with the Reserve Bank of India (RBI), which reduced its policy repo rate by 25 bps to 5.25% in December 2025 to support growth (projected at 7.3%) as inflation generalized downwards.
Monetary Divergence: While the ECB is “on hold” at its neutral rate (2%), the RBI’s pivot to a lower rate reflects India’s stronger domestic demand and different inflation trajectory.
Digital Connectivity: Strategic alignment is deepening through the Eurosystem’s initiative to interlink its TARGET Instant Payment Settlement (TIPS) with India’s Unified Payments Interface (UPI). This move, reinforced by the G20 roadmap, aims to streamline cross-border remittances—a critical area given India is a top recipient of euro area remittances.
Follow the full news here: The ECB Survey of Monetary Analysts Aggregated Results December 2025