ECB takes a wait-and-see approach

"Today’s upcoming interest rate decision by the ECB is unlikely to bring any major surprises. There are many indications that the ECB Governing Council will stick to its current course and leave the policy rate at 2 percent, thus extending the interest rate pause from September.

The ECB is following a wait-and-see approach and is unlikely to take any further interest rate measures as long as there is no significant deterioration in the economic environment. By continuing its interest rate pause, the ECB is retaining maximum monetary policy flexibility to wait and see how past interest rate cuts will affect the eurozone economy. As this will take up to a year and a half, the expansive effect of past interest rate cuts is expected to continue into 2026.

Inflation remains stable: the annual inflation rate in the eurozone was 2.2 percent in September, just above the ECB's target range. Core inflation also remained stable at 2.3 percent, with energy prices in particular currently dampening inflation. This means that the primary goal of price stability is not currently at risk. At the same time, the eight previous interest rate cuts since mid-2024 are having an increasingly stimulating effect on consumption and investment.

Nevertheless, the economic data is mixed: current economic growth in the eurozone is just over 1 percent and is expected to remain in this range in the coming year. The expected economic boost following fiscal expansion in Germany is developing only slowly. At the same time, high government debt in France and the government crisis there could have a negative impact on economic growth in the eurozone's second-largest economy. Added to this are global uncertainties regarding trade with the US and China, possible tariffs or exchange rate fluctuations, and potential financial market turbulence in the dollar bond market."