The European Central Bank is expected to keep interest rates unchanged at its next meeting and throughout the year. Inflation in the eurozone is coming under control, supporting policymakers’ cautious stance.
The ECB previously kept its policy rate at 2% and raised its growth forecast, a move that markets interpreted as a signal that the central bank is in no rush to adjust policy after a series of rate cuts in 2025.
While ECB President Christine Lagarde described monetary policy as currently appropriate, uncertainties remain, particularly around external risks such as US tariff policies that could affect global trade.
Deutsche Bank economists see policy risks now tilted to the downside as inflation expectations remain below target, but stress that the case for additional rate cuts is not yet strong.
They said that a strengthening euro, weaker economic growth and slowing inflation could prompt a policy change. However, for now, the ECB is expected to stick to its current stance amid increasing policy uncertainty.
