【Euro Fixed Deposit】Euro Fixed Deposit Surges to 16% "Shocking Interest Rate" - Citi Expects ECB to Keep Rates Unchanged This Year

This Thursday (March 19), five major central banks will hold interest rate meetings. The highlight is the Federal Reserve announcing its decision in the early hours of Hong Kong time. On the same day, Switzerland, Japan, the UK, and Europe will also hold rate meetings. Major U.S. banks expect all central banks to keep rates unchanged. Additionally, Europe is unlikely to raise rates for now, but foreign banks delivered a surprise by suddenly increasing the euro 7-day fixed deposit rate to 6%, with a new high of 16% for the new interest rate, breaking previous records.

Click here to view euro fixed deposit rate comparison

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Citi Bank’s Investment Strategy and Asset Allocation Director, Liao Jiahao, stated that Citi analysts expect the European Central Bank (ECB) to keep rates unchanged this year. The euro-to-dollar forecast for 3 months is 1.15, and for 6 to 12 months, 1.11.

Today (March 17), the euro is temporarily at 1.1489, a sharp drop of over 4% from recent highs of 1.2.

Since July last year, the ECB has maintained deposit facility rate at 2%, marginal lending facility rate at 2.4%, and main refinancing rate at 2.15%, unchanged.

Euro Becomes New Battleground as Domestic and Foreign Banks Compete

Furthermore, starting in 2026, the euro becomes a new battleground. Three major banks are aggressively pushing, including China CITIC Bank International, which recently launched a 7-day deposit with an 8% annual interest rate, matching HSBC and Hang Seng. Also, in early March, DBS increased the 7-day deposit rate by 6% to 16% after a sharp rise of 2% to 10% at the end of last year. It broke the nearly one-year dominance of the collective top rate of 13.88%, earning the title of “Short-term Interest Rate King.”

Latest Euro Fixed Deposit Rates:

Newly Launched:

• WeLab Bank: 3-month and 6-month deposits at 1%

Rate Increases:

• DBS: 7-day rate increased from 6% to 16%
• CCB (Chong Hing Bank): today increased 1-month and 2-month rates by 0.1% to 0.7%; last week, the 1-year rate was increased by 0.1% to 0.9%

Although euro short-term deposits are undergoing a reshuffle, the mid- to long-term rate rankings are still led by ICBC Asia at 1.45%, maintaining the top position.

Compare Highest Euro Deposit Rates for Different Terms:

Most 7-day high-yield options:

• DBS: 16% (sharp increase of 6% in March, valid until March 31)
• Collectoo: 13.88%
• Fubon: 12.88% (down 2% last year)
• HSBC (qualified for new funds), Hang Seng, WeLab: 8%
• HSBC (liquid financial annual rate), Bank of China Hong Kong: 7%
• HSBC: 6% (for branch or phone banking account opening)
• ZA Bank: 0.01%

Other high rates for medium to long-term deposits:

• 1 month: Fubon 3.88%
• 2 months: ICBC 1.45%
• 3 months: ICBC 1.45%
• Half-year: ICBC Asia 1.45%
• 9 months: CCB (Chong Hing Bank) 0.8%
• 1 year: ICBC Asia 1.45%

DBS’s limited-time 16% super high rate ends at the end of March

Reminder: March has entered the second half, and many special promotional rates will expire on March 31.

Rates expiring at the end of March:

• DBS 7-day 16%: minimum threshold of HKD 300,000, available to “DBS Account,” “DBS Wealth Management,” “DBS Private Banking,” and “Cross-border Wealth Management” clients, as well as “Cross-border Wealth Management” clients
• Fubon 7-day 12.88%, 1-month 3.88%: minimum deposit of EUR 11,000, available at branches or via Fubon+ mobile banking for designated currencies
• Collectoo 7-day 13.88%, 1-month 3.6%: minimum EUR 5,000, eligible individual and corporate clients, available via online, mobile banking, or branch, with a cap of EUR 2 million
• Hang Seng 7-day 8%: equivalent to HKD 10,000, during designated trading hours, via Hang Seng Mobile App, personal e-Banking, phone banking hotline, or branch, for specific currency exchanges
• HSBC 7-day 8%: minimum EUR 2,000, for “Premier Banking” clients, with “qualified new funds,” available only at branches and via phone banking

Citi expert Liao Jiahao predicts euro may test 1.168 in the short term

Before the US-Iran conflict escalated, the euro was briefly strong enough to alarm the European Central Bank, as the exchange rate was too strong, potentially hindering the uneven economic recovery within the region. ECB officials have been dovish, pausing rate hikes. Now, however, there is a reversal, with concerns that the oil crisis could reignite inflation and harm the economy. Recently, the euro has fallen from 1.2 to around 1.15 against the dollar. Currency markets suggest the ECB may raise rates twice this year, possibly as early as June.

Expert euro forecasts:

• Liao Jiahao from Citi: Citi’s inflation model shows Brent crude oil prices, denominated in euros, have risen nearly 16% since February, which could lead to overall inflation in 2026 and 2027, with year-over-year increases from 1.8% to 2.2% and 1.9%, respectively. Still close to the ECB’s 2% target, allowing the ECB to keep rates steady. This week’s focus will be on the hawkish committee’s view on recent energy price increases. The euro/dollar outlook remains weak, possibly dropping to around 1.168, with opportunities to sell on rallies.
• OCBC Hong Kong economist Wang Hao-ting: In the next two weeks, EUR/USD may range between 1.1507 and 1.1677, and EUR/HKD between 9.0063 and 9.1394. The forecast for mid-year is 1.22, with a year-end target of 1.23. Despite market bets on ECB rate hikes by year-end, high oil prices continue to weigh on trade terms for energy-importing countries and the euro. Maintain a neutral view on the euro until geopolitical tensions ease. If oil prices stay around $100 per barrel before mid-year, the euro could fall to 1.13–1.12. Given Europe’s energy dependence, the euro is relatively weaker against other G7 currencies in the short term.
• Standard Chartered Hong Kong Wealth Investment Strategy Head Chen Zhenglu: The ECB is likely to keep rates unchanged this week, but markets expect a rate hike in July. EUR/USD is near oversold levels, with support around 1.14, suggesting a possible technical rebound. Meanwhile, the market expects the Bank of England to hold steady until the end of the year, and investors may consider favoring the euro against the pound to capitalize on divergence in monetary policy, targeting 0.893.
• Hongku Asset Management CEO Lu Tinglong: It’s still premature for the ECB to hike rates; they are likely to adopt a wait-and-see approach. The surge in oil prices has triggered global inflation, but the impact remains uncertain. CPI may also limit consumption and infrastructure investment, leading to economic contraction. If the ECB does raise rates, the US, Japan, and UK will likely do so as well. The dollar’s safe-haven demand remains strong, and the euro is expected to fluctuate between 1.14 and 1.165 in the short term. Rate hikes will have a neutral effect on the euro’s trend.
• Short-term technical levels: EUR/USD is consolidating at low levels, with support at 1.15. The rally above 1.165 remains unconfirmed, maintaining a wait-and-see pattern. RSI and stochastic indicators are in oversold territory, with resistance at 1.168.

Thursday’s Rate Decision Focuses on Energy Price Impact

With energy prices surging, inflation risks are reignited. Although inflation has been below 2% in the eurozone for nearly three months, the EU recently warned that inflation could exceed 3% this year.

The ECB’s Thursday meeting will release the latest quarterly economic forecasts. President Christine Lagarde has reiterated that the ECB will continue to incorporate additional scenario analyses, simulating how policies might respond to various shocks, including whether rate hikes are necessary. She emphasized that the current uncertainty is unprecedented, and there is no urgent need to adjust borrowing costs.

Von der Leyen: US-Iran Conflict Has Cost Europe About €3 Billion

EU Commission President Ursula von der Leyen stated last week that the US-Iran conflict has caused energy prices in Europe to soar. Within ten days of the outbreak of war, Europe had to pay an extra €3 billion for energy imports. The European Commission is evaluating measures to reduce energy bills, including capping natural gas prices.

Von der Leyen emphasized that while the EU has promoted diversification of fossil fuel sources in recent years, this does not mean immunity from price shocks. Relying again on Russian fossil fuels amid the current crisis would be a strategic mistake.

The three-year Russia-Ukraine conflict has caused energy prices across the EU to skyrocket. European businesses and consumers have long suffered, and now the Gulf crisis is again impacting global energy supply and transportation systems. The European Commission faces mounting pressure.

This Week’s Rate Decisions in US, Europe, Canada, and Japan: Citi Expects No Rate Hikes

Additionally, Australia’s Reserve Bank raised rates by 0.25% to 4.1%, making it the highest among major currencies. Industry forecasts for this “rate week” include:

• March 18 (Wednesday): Canada’s rate decision: Citi expects the Bank of Canada to hold rates steady this time, with cuts of 25 basis points in April and June to 1.75%
• March 19 (Thursday): Federal Reserve rate decision: markets expect only a rate cut in the second half of the year
• March 19: Japan’s rate decision: Citi expects no rate hike this time, with a 25 basis point increase in July; short-term USD/JPY to stay between 155 and 160; by year-end, rising to around 145
• March 19: UK rate decision: Citi expects rates to remain steady, with potential cuts of 25 basis points in April, July, and November; GBP/USD forecast at 1.31 for 3 months
• March 19: Europe’s rate decision: Citi expects the ECB to keep rates unchanged this year
• March 19: Switzerland’s rate decision: expected to remain at zero