Published by Global Banking & Finance Review®
Posted on October 22, 2025
3 min readLast updated: January 21, 2026
Add as preferred source on GoogleThe ECB will hold interest rates until 2027 as inflation stays near 2% and growth remains steady, despite political risks.
By Indradip Ghosh
BENGALURU -The European Central Bank has finished cutting interest rates as inflation holds around its 2% target and the economy marches steadily on, according to a growing majority of economists in a Reuters poll.
While inflation picked up slightly to 2.2% last month from 2.0% in August, accounts of the ECB's September 10-11 meeting stated its policy was "sufficiently robust" to manage any inflation shocks.
The central bank kept rates on hold last month and offered a modestly upbeat assessment of the bloc's economy.
NO CHANGE EXPECTED ON OCTOBER 30
The ECB, which cut the deposit rate by 200 basis points between June 2024 and June 2025, will keep it unchanged at 2.00% on October 30 for a third straight meeting, all 88 economists in the October 15-22 Reuters poll said.
Nearly 72%, 63 of 88, said the ECB would hold its deposit rate this year, while 57% - 45 of 79 - saw no change by the end of next year.
Last month, slightly less than half expected rates to be unchanged at end-2026. Rate futures are narrowly pricing a 25 basis point cut by end-2026.
"A lack of softening in recent (economic) activity and inflation data closes the window for an additional ECB 'insurance cut'. We are dropping what would have been the last cut from our forecast and now foresee the policy rate staying at 2.00% until the end of 2026," said Shaan Raithatha, senior economist at Vanguard.
That contrasts with expectations for two more rate cuts from the U.S. Federal Reserve this year, where a weakening labour market is taking precedence over rising inflation risks, partly stoked by tariffs, a separate Reuters survey showed.
The euro zone is handling U.S. trade barriers better than previously expected, leaving inflation risks "quite contained", ECB President Christine Lagarde said on September 30.
Inflation will average around 2% each year through 2027, poll medians showed, largely unchanged from last month.
STABLE GROWTH OUTLOOK
The growth outlook also remained stable amid hopes of fiscal spending, particularly from Germany - the bloc's biggest economy. The euro zone economy will expand 1.2%, 1.1% and 1.4% this year, next year and in 2027, respectively, the poll predicted.
But that stable outlook has downside risks. A majority of economists - 24 of 30 - who responded to a separate question said the euro zone economy was more likely to grow slower than they expect over the coming year than faster.
"Euro zone resilience is what is driving the steady outlook ... But the risk is still clearly to the downside both in terms of growth and inflation," said Carsten Brzeski, global head of macro at ING.
"Political instability is very likely to bring down French growth. In Germany, we're now seeing growth optimism is being hit and it could very well be it takes longer than expected before the stimulus story shows up."
Germany's economy is forecast to grow a mere 0.2% this year and 1.1% in 2026, largely unchanged from July's forecasts, despite optimism around infrastructure spending plans. Growth in France will be 0.6% this year and 0.9% in 2026, the poll predicted.
(Other stories from the Reuters global economic poll)
(Reporting by Indradip Ghosh; Polling by Renusri K and Debrah Gomes; Editing by Alison Williams)
The European Central Bank (ECB) is the central bank for the euro, responsible for monetary policy in the Eurozone, aiming to maintain price stability and regulate financial institutions.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to maintain economic stability.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They are influenced by central bank policies and economic conditions.
Economic growth refers to the increase in the production of goods and services in an economy over time, typically measured by the rise in Gross Domestic Product (GDP).
Monetary policy is the process by which a central bank manages the supply of money, often through interest rates, to achieve specific economic goals such as controlling inflation and stabilizing currency.
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