ECB Signals End to Rate Cuts as Inflation Nears Target

The European Central Bank is preparing to halt its cycle of interest-rate reductions as inflation stabilizes around its 2% target. Executive Board member Isabel Schnabel noted medium-term price growth forecasts align perfectly with the bank''s goal, at 1.9% for both 2026 and 2027.

Despite global trade tensions, ECB policy transmission remains effective, with financing conditions no longer restrictive. Eight consecutive rate cuts over the past year appear sufficient, as President Christine Lagarde confirms the easing cycle is nearing its conclusion.

Germany''s increased public spending is expected to bolster growth, while inflation projections show a temporary dip to 1.6% in 2026 before returning to target. "We''re well positioned to weather uncertainties," Lagarde stated, emphasizing the ECB''s readiness for potential shocks from US trade policy shifts.