Inflation and Interest Rates

Key Points

• Germany's inflation rate rises from 1.9% in February to an expected 2.7% in March 2026 (Statistisches Bundesamt)
• On 19 March 2026, the ECB kept the deposit rate at 2.0% for the sixth consecutive time
• According to a Reuters survey, 85% of economists surveyed in January expect no interest rate changes in 2026
• Core inflation excluding energy and food remains at 2.5% in February
• Top day-money rates average 3.3% per annum (as of February 2026)
• The current inflation rate of 2.6% is above the ECB's target of 2.0%

Inflation Spike in March 2026

Prices in Germany are accelerating significantly in March 2026. The Statistisches Bundesamt forecasts an increase in the inflation rate to 2.7%, measured as the change in the consumer price index year-on-year. In February, the preliminary rate was still 1.9%.

With the current inflation rate of around 2.6%, Germany is exceeding the European Central Bank's inflation target of 2.0%. Core inflation, which excludes volatile energy and food prices, remains at 2.5% in February. This indicator measures underlying inflation and provides insights into medium-term price developments.

For the coming months, the medium-term outlook suggests convergence towards the ECB's target rate. In the most likely scenario, inflation should remain stable over the course of 2026 without further upside surprises.

ECB Holds Key Rate Steady for Sixth Time

The ECB Governing Council kept the deposit rate at 2.0% for the sixth consecutive time on 19 March 2026. The deposit rate is the interest rate that commercial banks receive when they park excess liquidity at the central bank. It is considered the ECB's most important key rate and significantly influences monetary policy in the eurozone.

The interest rate pause signals stable monetary policy orientation. Following strong rate increases in recent years, the ECB has entered a period of wait-and-see. The central bank appears to view inflation developments as manageable and is refraining from further tightening measures for now.

Economists Expect No Movement in Interest Rates

Expectations for further interest rate moves in the current year are muted. According to a Reuters survey from January 2026, 85% of surveyed economists expect no interest rate changes in 2026. Further rate hikes are thus moving into the distance.

This assessment reflects changing market conditions. While inflation control was the top priority in 2022 and 2023, the focus is now on economic stabilization. The ECB is navigating between the need to keep prices under control and the risk of hindering economic recovery through overly restrictive rates.

Attractive Interest Rates for Savers in the Eurozone

Average top day-money rates stand at 3.3% per annum in February 2026. Day-money is a flexible form of investment where savers can access their money daily and receive interest at the same time. These conditions benefit directly from the elevated ECB key rate, which banks pass on to customers in the form of higher savings rates.

For investors in the DACH region, this means: The real interest rate, that is the interest rate minus inflation, is moving into slightly positive territory. With day-money rates of 3.3% and an inflation rate of 2.6%, a real return of around 0.7% results. This is significantly more attractive than in the years of negative real interest rates until 2022.

Burden on Debt-Financed Companies

The interest rate environment affects companies differently. Companies that have borrowed debt capital in recent years face higher refinancing costs. When extending existing credit facilities or taking out new loans, they must contend with interest rates significantly above the levels of 2015 to 2021.

These elevated debt costs weigh on margins and restrict financial flexibility. Companies with high debt ratios or short credit maturities feel the impact particularly strongly. The interest burden reduces profits and can delay investment decisions.

Outlook: Stable Monetary Policy in the Eurozone

The ECB's interest rate decision plays a central role in economic development in the eurozone. The current phase of stable rates combined with moderate inflation provides planning certainty for businesses and consumers.

The medium-term forecast suggests inflation will converge towards the ECB's target rate. As long as this scenario holds, the central bank is likely to maintain its wait-and-see stance. Only if inflation falls sustainably below 2.0% or economic risks increase could the ECB consider rate cuts.

For investors in Germany, Austria and Switzerland, this means: The period of attractive interest rates on safe investments is likely to continue. At the same time, purchasing power is largely preserved by moderate inflation.