ECB Holds Interest Rates at 2 Percent Amid Stable Inflation Expectations

The European Central Bank (ECB) is expected to hold interest rates steady at 2% for the third consecutive meeting, reflecting stable inflation near the 2% target and a resilient eurozone economy. Inflation expectations among consumers remain broadly unchanged, and while inflation has risen slightly to 2.2%, policymakers view risks as balanced, with some concern about downside risks from a stronger euro and external trade pressures. The ECB's cautious stance includes the possibility of moderate rate hikes starting in late 2026 if fiscal policies in Germany loosen and the labor market remains strong, but rate cuts could still occur if the economy weakens. President Christine Lagarde described the monetary policy as being in a "good place," with the bank ready to respond to any new shocks. Market expectations are mixed, with some investors anticipating potential rate cuts in December amid economic uncertainties and others seeing the next move as equally likely to be an increase. Overall, the ECB's approach balances steady growth with vigilance against inflation risks amid ongoing geopolitical and economic challenges.