ECB to hold rates steady amid eurozone recovery
The European Central Bank will likely maintain its deposit rate at 2 percent on Thursday after three consecutive decisions to leave borrowing costs unchanged. Inflation has stabilized near the bank’s target while the eurozone shows signs of economic improvement following concerns about American tariffs.
President Christine Lagarde said in September the bank holds a strong position to address inflation risks or unexpected developments. The Fed meets on Wednesday and analysts expect another rate reduction as unemployment concerns mount across the United States.
Economists debate whether the ECB should resume cuts in December as wage growth slows and the euro strengthens. Lithuania’s Gediminas Simkus said reducing rates would help prevent inflation from falling too low.
Carsten Brzeski from ING cited potential problems from tariffs, delays to German defense spending and France’s political troubles as factors that might prompt further reductions. Capital Economics predicts additional cuts through 2026 as the labor market weakens.
