ECB Maintains Cautious Stance on Rate Cuts Amid Balanced Inflation Risks

The European Central Bank held interest rates steady in September, signaling a high threshold for further monetary easing despite lingering trade tensions. Inflation hovered NEAR the 2% target, with updated projections showing headline inflation at 2.1% for 2025 before moderating to 1.9% by 2027. Core inflation excluding volatile components remains slightly elevated at 2.4% next year.

Economic growth forecasts saw modest revisions—2025 GDP expectations ROSE to 1.2% from 0.9%, while 2026 projections dipped to 1.0%. The Governing Council emphasized current rates' robustness against shocks, noting 'two-sided inflation risks' in their meeting accounts. Since September, diminishing odds of additional cuts have been reinforced by ECB President Lagarde's recent cautious remarks and resilient economic data.