Interest rate forecast 2023

Our interest rate forecast is a result of internal discussions in which we discuss interest rate forecasts of the major banks. We share our opinion with you on this page as a suggestion for your consideration. Please note that an examination of all economic forecasting models used to date found that no model was able to predict the economic future.


At the beginning of 2022, the mid-swap rate for 10-year maturities was around 0.34%. After two increases, the rate peaked at around 3.33% on 10/10/2022. Today, on Dec. 13, 2022, it stands at around 2.65%, following a slight decline in the inflation rate.

The analyses we have evaluated forecast a renewed rise in interest rates in the 1st half of 2023, with rates around 3.05% to 3.25% expected for the 10-year mid-swap rate. 

In contrast, falling interest rates are anticipated for H2 2023. The range of expectations is currently very wide. They range from 2.35% to 3.05%. A similarly wide divergence can be seen in the expected inflation rate, which ranges from 5.3% to 7.5% for the EU. The forecasts for the inflation rate in 2024 are more uniform, with a spread of 2.5% to 3.5%. The ECB does not expect inflation to fall below the 2% target until 2025, when it is expected to be 1.8%. 

At the short end, the ECB is expected to raise the deposit rate by 0.5% to 2% this month. It is also assumed that the rate will be raised in three steps to 3% in H1 2023. No further changes to the deposit facility are expected for the rest of the year.   

What does the ECB plan to do with bonds at the long end of the capital market? Presumably, the reduction of bond holdings will start in H1 2023. Partly, it is suspected that the ECB could replace only 50% of the maturing bonds. Thus, the ECB could start the reduction at about 3% of the stock. The reduction rate would be significantly lower than in the U.S., where the Fed is reducing 6 to 7% p.a. The ECB, which holds about 40% of government debt on its books in the EU, can thus presumably avoid a more significant increase in interest rates for government budgets.

Berlin the 13.12.2022 

Asger Nielsen 


Asger Nielsen

Managing Director, Partner


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