The ECB keeps rates unchanged. The YTM of the Savings Portfolio in Euros remains at 1.60%

Rates unchanged.

In the meeting on December 18, the ECB kept interest rates unchanged for the fourth consecutive time. Inflation remains close to the 2% target, so there are not many reasons to change official rates.

Stronger economic expansion

New projections point to stronger economic expansion and that inflation will not return to 2% until 2028, after having been below that level for most of 2026 and 2027. General inflation is expected to decrease from 2.1% in 2025 to 1.9% in 2026 and 1.8% in 2027, before returning to 2% only in 2028.

President Lagarde emphasized that decisions will be taken meeting by meeting based on incoming data, and that all monetary policy options must remain open. This is the usual stance of the ECB, which defines itself as data-dependent.

End of the rate-cutting cycle?

The opinion of many economists and, according to the press, also of numerous officials within the ECB, is that the rate-cutting cycle may have ended. The deposit facility rate may have thus found a floor around 2%, after eight cuts from the 4% peak. The period of zero or negative rates prior to the pandemic would therefore be interpreted as more of a historical anomaly than the new normal.

Talking about rate hikes, however, is considered premature: both economists and investors expect a pause phase, with rates unchanged for a fairly prolonged period.

Eurozone growth, currently quite stagnant, is expected to be driven by public spending on infrastructure and defense. As for inflation, there are currently no significant upward pressures.

However, there are opposing forces affecting price dynamics in Europe, making forecasts difficult. On one hand, the current drop in energy prices helps contain price increases, but Europe remains structurally dependent on energy imports from abroad, exposing it to possible supply shocks.

On the disinflation front, the growing diversion of trade flows following U.S. tariffs is channeling a larger share of Chinese exports to Europe. The consequent inflow of low-cost goods is exerting additional downward pressure on prices in various consumer and industrial segments.

The Savings Portfolio remains in Euros at 1.60%

Regarding our portfolios, official rates are especially relevant for savings portfolios, as they directly reflect rate evolution, net of fees.

In this context, our euro savings portfolios remain a solid option for those seeking to preserve value and achieve reasonable returns without taking risks.

After the ECB’s decisions, the YTM (variable) of our euro savings portfolios remains at 1.60% for the euro portfolio (unchanged).

InbestMe’s savings portfolios are an ideal option for those seeking a solution for liquidity and/or an emergency fund.

The YTMs of our savings portfolios have consistently outperformed traditional deposits, accumulating 7.9%, 2% more than the average bank deposit (5.9%) up to 1 year (see chart below).

Savings portfolios are also generally more efficient than traditional bank deposits because:

• they accumulate returns and benefit from compound interest
• they are more tax-efficient. Taxes are not paid until liquidation
• they can be transferred to other fund portfolios, taking advantage of transferability and tax deferral

For other goals, other portfolio options: target, bonds, index funds, and pension plans

Para los inversores que prefieren fijar un rendimiento determinado durante más tiempo, que acepten algo más de riesgo o puedan fijar un plazo, les recordamos que tenemos una gama completa de carteras con rentabilidad objetivo y carteras de bonos (tanto en Euros como en dólares) que permiten prolongar la exposición a vencimientos/duraciones más largas.

For investors who prefer to lock in a specific return over a longer period, accept slightly more risk, or can set a term, we remind you that we have a complete range of target-return portfolios and bond portfolios (both in Euros and dollars) that allow extending exposure to longer maturities/durations.

These portfolios have now become more attractive due to this year’s ECB cuts.

If your horizon is medium or long-term, it is more convenient to consider our index fund portfolios, and for retirement our pension plan portfolios, as shown in the table above.

All of them have generally achieved excellent returns despite the volatile environment of the first half of 2025.

At inbestMe we offer an investment methodology that allows you to invest with confidence in any market situation.