The ECB kept interest rates unchanged in September, with policymakers insisting that current levels are strong enough to manage the risk of two-way inflation. The bank stressed the need to “wait for more information” before making new decisions on monetary policy.
The minutes of the meeting showed a moderate optimism about the eurozone economy, but the direction of inflation remains uncertain. Some members worry that inflation may fall short of its 2% target, while others fear it could exceed it.
ECB President Christine Lagarde said that the inflation risk range is now narrowing, making the probability of additional rate cuts significantly lower. Markets are not currently expecting any easing this year, but see a slim chance of another cut in early 2026.
The ECB is also assessing external factors including US tariffs, a strengthening euro, China’s export dumping, and US market volatility. While some risks have eased following a trade deal with the US, the bank remains cautious about global threats.
However, pressures in major eurozone economies such as weakness in German industry, political unrest in France, and slowing household spending still pose downside risks to growth, keeping policy easing still on investors' radar.
