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The European Central Bank kept interest rates unchanged as expected, while raising its growth and inflation forecasts, reinforcing the view that the rate cut cycle is over.
The resilience of the eurozone economy to global trade pressures has reduced the need for the ECB to ease further, although the option of a rate cut is still formally moot.
The ECB expects inflation to remain close to its 2% target for several years to come, although it may temporarily fall next year due to lower energy costs.
Inflation forecasts for 2026 and 2027 were revised up and economic growth forecasts were also raised, reflecting the strength of domestic demand.
Investors are now waiting for a statement from ECB President Christine Lagarde for an indication of whether the central bank is moving away from rate cuts and opening up room for hikes in the coming years.
