The ECB keeps rates unchanged. Euro Savings Portfolio yield remains at 1.60%

As expected, the European Central Bank decided not to change interest rates and reiterated its confidence that inflation will continue moving toward its long-term 2% target.

The deposit facility remains at 2%, the main refinancing rate at 2.15%, and the marginal lending facility at 2.40%. These levels represent the current low after the tightening cycle that pushed the deposit rate to a 4% peak in 2024.

With this decision, the ECB has now held rates steady for five consecutive meetings, indicating it sees current monetary policy as compatible with a gradual return of inflation to target.

The statement conveys a relatively optimistic view of the economy. According to the ECB, factors such as low unemployment, strong private-sector balance sheets, the gradual rollout of public spending on defense and infrastructure, and the effects of previous rate cuts are supporting growth.

All this, however, occurs in a context of high uncertainty due to trade tensions and the geopolitical landscape.

Christine Lagarde again stressed the need to accelerate key reforms in Europe, including:

• Advancing toward a savings and investment union
• Promoting the digital euro for both retail and wholesale payments
• Deepening the single market
• Encouraging innovation to strengthen strategic autonomy
• Simplifying European legislation

The Fed shift after Kevin Warsh’s appointment

The ECB meeting took place days after Kevin Warsh was chosen as the next Federal Reserve chair. This is a significant change, which Lagarde welcomed positively.

Warsh supports continued rate cuts in the United States, convinced that productivity gains from artificial intelligence could help contain inflation even with a strong economy.

However, he is more critical of asset-purchase tools such as quantitative easing (QE), except in exceptional crises like 2008 or the pandemic, and has previously advocated reducing the central bank’s balance sheet.

Less asset purchasing means less market liquidity, something investors are closely watching. Expectations of Fed balance-sheet normalization are leading to risk reassessments, particularly in liquidity-sensitive and leveraged segments such as cryptocurrencies or precious metals.

Interest rates vs. QE: two different tools

Rates and asset purchases are complementary monetary tools but not perfect substitutes. According to Warsh, a smaller balance sheet could allow lower interest rates, benefiting the real economy, whereas QE mainly boosts financial asset prices.

In short, while the Federal Reserve appears oriented toward gradual rate cuts (possibly combined with balance-sheet reduction once Warsh takes office in May), the ECB favors a prolonged pause pending greater macroeconomic and geopolitical clarity.

Savings Portfolio remains at 1.60% in euros

Regarding our portfolios, official interest rates are especially relevant for savings portfolios, as these directly reflect rate movements, after fees.

In this context, our euro savings portfolios continue to be a solid option for those looking to preserve value and achieve reasonable returns without taking on significant risk.

Following the recent decisions, the variable yield (YTM) of our euro savings portfolios remains at 1.60% (unchanged).

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

The returns of our savings portfolios have consistently outperformed traditional deposits, accumulating 8.2%, which is 2% higher than the average one-year bank deposit (6.2%) (see chart below).

Since its inception, the Savings Portfolio has generated an annualized return of 2.6%, 0.6 percentage points higher than the average one-year bank deposit. In 2025, it accumulated 1.8%.

Savings portfolios are also generally more efficient than a traditional bank deposit because they:

• Accumulate returns and benefit from compound interest
• Are more tax-efficient, with taxes only due at the time of liquidation
• Can be transferred to other fund portfolios, taking advantage of portability and tax deferral

For other goals, there are alternative portfolio options: target-return portfolios, bond portfolios, indexed fund portfolios, and pension plan portfolios

However, savings portfolios may not be sufficient to outperform inflation.

For investors who prefer to lock in a specific return for a longer period, who are willing to accept somewhat more risk or can commit to a set timeframe, we remind you that we offer a full range of target-return portfolios and bond portfolios (both in euros and in dollars) that allow for extended exposure to longer maturities/durations.

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

Overall, inbestMe’s more conservative portfolios have continued to meet their objectives in 2025.

If achieving your goals requires clearly outperforming inflation and your horizon is medium or long term, it may be more appropriate to consider our indexed fund portfolios and, for retirement, our pension plan portfolios, as shown in the chart above.

Overall, they have delivered excellent returns despite the volatile environment in the first half of 2025.

At inbestMe, we offer an investment methodology designed to help you invest with confidence in any market environment.