European Central Bank pauses again, further easing still possible
|The European Central Bank (ECB) held its Deposit Rate steady at 2.00% at today's monetary policy announcement, keeping its monetary policy stance on hold for the second meeting in a row. The accompanying statement was neutral in tone and offered little in the way of forward guidance on future policy moves. The ECB made only modest revisions to its economic projections, raising its economic growth outlook modestly, while lowering its forecast for underlying inflation very slightly. The ECB projects underlying inflation at 2.4% for 2025, 1.9% for 2026, and 1.8% for 2027. The fact that the central bank's medium-term inflation forecasts are below the 2% inflation target, and the 2027 forecast was revised lower, are modestly dovish signals in our view. The dovish signal from the economic projections was largely offset however by comments from ECB President Lagarde. She said that growth risks were balanced, and suggested the disinflationary process for the Eurozone is now over. Despite the overall neutral tone of today's announcement, we expect the evolving growth, wage and inflation trends will still see the ECB deliver one final 25 bps rate cut, to 1.75%, at its December meeting. We expect growth to soften in the coming quarters, reflecting slower employment and income growth, and still subdued sentiment and confidence. Meanwhile, wage and labor cost pressures continue to show a gradual deceleration, which we view as consistent with core inflation converging to target and leading to modest further monetary easing. The European Central Bank (ECB) held its Deposit Rate steady at 2.00% at today's monetary policy announcement, keeping its monetary policy on hold for the second meeting in a row. The ECB offered little in the way of new guidance, while making only marginal changes to its economic projections. Overall, our outlook for ECB monetary policy remains unchanged, and we still see potential for modest further monetary easing.Summary
European Central Bank pauses for a second meeting
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.