The ECB Raises Rates by 0.25%. The Yield of the Euro Savings Portfolio Increases to 1.85%

Yesterday, the ECB increased its three key interest rates by 25 basis points. With this adjustment, the deposit facility rises to 2.25% (from the previous 2.00%), the main refinancing rate stands at 2.40%, and the marginal lending facility reaches 2.65%, effective from June 17. This is the first interest rate hike in nearly three years.

Christine Lagarde emphasized that the decision was unanimous and without reservations, supported by the Eurosystem’s projections. Inflation in Europe stood at 3.2%, driven mainly by a 10.9% increase in energy prices following the closure of the Strait of Hormuz. Europe remains highly vulnerable to supply shocks that put upward pressure on prices.

In addition, the ECB noted that price increases are spreading to other sectors. Services inflation rose to 3.5% in May, up from 3.0% in April. The Eurosystem’s projections have been revised upward: inflation is now expected to reach 3.0% in 2026 (compared with the 2.6% forecast in March), 2.3% in 2027, and 2.0% in 2028.

The ECB’s move represents the first interest rate increase by one of the world’s major central banks. The Bank of Japan may soon follow suit, with a possible rate increase from the current 0.75% to 1.0%. The outlook is more uncertain for the Federal Reserve, where Warsh will take office as the new Chair starting with the next meeting.

The Yield of the Savings Portfolio Increases to 1.85%

The ECB’s decision automatically increases the variable yield of inbestMe’s Euro Savings Portfolio to 1.85%.*

*Important note: the increase will take effect a few days after its official implementation on 17/06/2026, as the positions of the funds that make up the portfolio are gradually renewed.

Generally speaking, the return of the savings portfolio will not be enough to outperform inflation. However, comparing its performance with that of traditional bank deposits is revealing.

Since the launch of the portfolio (through the end of May 2026), its cumulative return has been 8.9%, compared with 7.0% for the average one-year bank deposit, representing a 1.9 percentage point advantage for our clients—a notable difference considering the relatively short period.

If we convert these figures into annualized returns (APY), the savings portfolio has delivered an annualized return of 2.5%, compared with 2.1% for the average one-year bank deposit, an advantage of 0.4 percentage points. And all this without having to switch from one bank to another in search of the latest promotional offer.

Beyond returns, inbestMe’s savings portfolios offer structural advantages that traditional deposits do not provide:

• Automatic compounding: returns accumulate automatically without the need for periodic renewals. Returns are not tied to commercial promotions or limited in time. They are variable and can move up (as they are now) or down depending on ECB rates. However, their structure means there is no need to constantly negotiate or look for alternatives.
• Tax efficiency: taxes are not paid until redemption, allowing taxation to be deferred until funds are withdrawn, which may be many years in the future.
• Transferability: assets can be transferred to other fund portfolios without triggering taxation, taking advantage of the tax-efficient transfer regime.
• Available from €1,000 with no conditions: some bank deposits require large balances or special conditions (salary deposits, direct debits, etc.).
• No penalties and no fixed term: a deposit may be subject to penalties if funds are withdrawn before maturity, or its interest rate may only apply for a limited promotional period. The savings portfolio has no maturity date and no penalties. Its yield is linked to ECB rates rather than promotional offers. Funds are typically available within approximately five business days.

The portfolio’s metrics are excellent, as shown in the table above, and its flexibility makes it a highly efficient savings solution for most clients, whether for optimizing very short-term savings or building an emergency fund.

However, for medium- or long-term goals, it may not be sufficient on its own.

Which Portfolio Best Fits Your Situation?

We have seen that savings portfolios are the ideal solution for liquidity management and emergency funds in the short term. However, on their own they may not be enough to outperform inflation over the long term. Typically, their returns will be a few tenths of a percentage point—or up to one full percentage point—below inflation. Depending on your investment horizon and objectives, inbestMe offers complementary alternatives that may be more suitable:

• Target Return Portfolios and Bond Portfolios (in euros and US dollars): for investors who want to lock in a return for a longer period and are willing to take on slightly more risk or commit to a specific investment term. A couple of months ago, we launched new target return portfolios using investment funds, with target cumulative returns of up to 21% (at the time of writing).
• Index Fund Portfolios: the most suitable option if your investment horizon is medium or long term and you need to clearly outperform inflation, with expected annual returns ranging from 3% to 7%.
• Pension Portfolios: the optimal choice for retirement planning, offering immediate tax deductions on contributions, similar expected annual returns, and an allocation that evolves according to your age and needs.

To find out which portfolio is most suitable for you, discover your personalized investment plan at inbestMe. In addition, consider whether it makes sense to separate your objectives by combining several portfolios to plan your entire financial life, from your immediate savings needs to the long-term planning of your wealth.