Europe Asia News

The central bank of the 20 countries that use the euro raised many of the bloc’s growth and inflation forecasts. This move appears to close the door to interest rate cuts in the near term. In a statement, the ECB said: “The Governing Council today decided to keep the ECB’s three key interest rates unchanged. The updated assessment confirms that inflation will stabilize at the 2% target over the medium term,” and provided the following details:

“According to the new Eurosystem projections, headline inflation is expected to average 2.1% in 2025, 1.9% in 2026, 1.8% in 2027 and 2.0% in 2028. Inflation excluding energy and food is projected to average 2.4% in 2025, 2.2% in 2026, 1.9% in 2027 and 2.0% in 2028. Inflation for 2026 has been revised upwards, mainly because services inflation is now expected to decline more slowly. Economic growth, particularly driven by domestic demand, is expected to be stronger than in the September projections. Growth has been revised to 1.4% in 2025, 1.2% in 2026 and 1.4% in 2027, and is expected to remain at 1.4% in 2028.”

The statement emphasized that the ECB’s Governing Council is determined to ensure that inflation stabilizes at the 2% target over the medium term. “To determine the appropriate monetary policy stance, it will follow a data-dependent and meeting-by-meeting approach. In particular, the Governing Council’s interest rate decisions will be based on an assessment of the inflation outlook and the associated risks, in light of incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council will not pre-commit to a particular interest rate path,” it said.