On Thursday, minutes from the European Central Bank’s October 29–30 meeting showed policymakers increasingly confident that interest rates are "in a good place" after a year of cuts that halved the deposit rate to 2%. The Governing Council left rates unchanged at that meeting, judging policy to be sufficiently restrictive with eurozone growth still positive, if modest, and inflation now hovering near the ECB’s 2% target.
The accounts indicated a clear preference to "wait for more information" rather than pre-commit to further easing, with some members arguing the rate-cutting cycle may already be complete if the benign outlook holds. Others pushed back, insisting the ECB must preserve "full optionality" in case inflation undershoots target for too long, particularly as lower energy prices drive down headline readings in 2026.
Recent data have reinforced bets that the ECB will stay on hold for several months, with markets now assigning only about a one-in-three probability to another cut next year. The central bank will publish its first 2028 projections on December 18, but officials have already downplayed the weight of such long-range forecasts, stressing that future decisions will hinge on realized inflation and growth rather than distant models.
For investors and borrowers, the message is stability rather than imminent relief. Short-term funding costs in the euro area are likely to remain near current levels well into 2026, which supports bank margins and the euro’s yield appeal but limits how much additional stimulus the ECB can provide if growth slows sharply. Any persistent slide of inflation below target could eventually force a rethink, making upcoming price data and wage settlements critical to the rate path.
