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

Holger Schmiding, an analyst at Berenberg Bank, stated that the European Central Bank's deposit rate is expected to reach 3% by mid-2029, with the current rate level at 2.25%. With the temporary agreement between the US and Iran lowering energy costs, the overall inflation rate in the eurozone is expected to drop below 2% by early 2027. The European Central Bank is expected to postpone interest rate hikes until the end of 2028. Holger Schmieding said that by then, the aging population in Europe will cause labor supply to shrink faster than demand, thereby pushing up wages and forcing central banks to raise interest rates.