- The European Central Bank (ECB) kept policy rates unchanged at 2% for the fourth consecutive meeting, signaling that no cuts are likely in the near term.
- This rate has been stable since a cut in June, following a period of aggressive easing from 4% to 2% over the previous year.
- Eurozone economic growth has been stronger than expected, supported by domestic spending, a stable labor market, and exporters navigating U.S. tariffs more effectively than anticipated. ECB now forecasts growth of 1.4% in 2025, 1.2% in 2026, and 1.4% in 2027-28.
- Overall inflation is stable around the ECB’s 2% target, aided by falling energy prices, but services inflation remains higher at 3.5%. Core inflation forecasts for 2026-27 were revised upward due to slow declines in services inflation.
- ECB maintains a “meeting-by-meeting” approach, leaving future rate moves flexible, though most economists expect rates to stay unchanged through 2027.
ECB Leaves Rates Unchanged with Economy Showing Signs of Modest Growth
