The European Central Bank is all but certain to keep interest rates unchanged for a third straight meeting on Thursday, taking comfort in a rare stretch of economic calm marked by inflation at target and steady, if unspectacular, growth.
After cutting rates by a combined two percentage points between January and June, the ECB has since held its fire, signalling that the current stance is “appropriately calibrated” as policymakers assess how past easing is filtering through to the real economy. Headline inflation has settled close to the 2% goal, while core inflation has cooled, allowing the Governing Council to enjoy a brief pause in its long battle against price pressures.
President Christine Lagarde and other officials have recently struck a data-dependent tone, stressing that the central bank sees little urgency to act further unless incoming figures show a renewed slowdown in activity or a re-acceleration in prices. For now, credit conditions have begun to stabilise, lending surveys show tentative improvement, and wage growth is moderating — a combination that gives the ECB space to wait.
Still, policymakers remain alert to global headwinds. Shifting trade relations, ongoing U.S. tariff adjustments, and uncertainty over Chinese demand could yet test the euro area’s fragile recovery. Markets largely expect the ECB to stay on hold through year-end, with investors pricing the next potential move — likely another cut — only in the first half of 2026 if inflation remains anchored.
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Statement due at 1315 GMT
- 0915 US Eastern time
European Central Bank President Lagarde presser conference starts a half hour later.
