The European Central Bank (ECB) decides this Thursday, 18th, on the evolution of monetary policy and interest rates are expected to remain unchanged, as analysts anticipate, remaining on pause.
Martin Wolburg, senior economist at Generali AM, believes that the ECB continues to consider the policy rate to be in a “good spot”, situated in the middle of the neutral policy range.
After an interest rate cut by the US Federal Reserve, the market consensus “expects the divergence between the two central banks to increase, with the ECB being more likely to keep rates unchanged at its meeting on December 18”, he points out.
“We agree and hope that the ECB remains in hibernation for now”, concludes the analyst, in a note in anticipation of the meeting.
The last time the ECB cut interest rates was in June, and since then key rates have remained unchanged. If the central bank decides not to change rates, it will be the fourth consecutive meeting without cuts.
As Michael Krautzberger, director of Global Public Markets Investment at AllianzGI, also points out, in an analysis note, central bankers in the euro zone continue to enjoy a “comfortable position”, unlike their counterparts in the USA, United Kingdom and Japan, who face “persistent inflationary pressures”.
AllianzGI does not anticipate another interest rate cut at the next ECB meeting, although it admits that “there may be room for a cut in the first half of 2026”.
Carsten Brzeski, Macro Director at ING, corroborates this position by pointing out, in an analytical note, that “there is very little reason for the ECB to change its current monetary policy stance, confirming once again that it is in a ‘good position'”.
“We expect interest rates to remain unchanged, but there are differing opinions on what will happen next and a new round of forecasts,” he says, pointing to uncertainty about the future.
Regarding forecasts, ECB President Christine Lagarde said last week that the institution’s growth projections for the euro zone economy could be revised upwards at the December meeting.
In September, the ECB improved its euro zone GDP growth projection for 2025 to 1.2%, up from the 0.9% projected in June, the first upward revision of growth projections since March 2024.