ECB Expected to Maintain Policy Rates

The European Central Bank is widely expected to hold interest rates unchanged for a second consecutive meeting on Thursday, as policymakers maintain a cautious “wait-and-see” approach amid stable inflation, a resilient economy, and trade policy uncertainty. The main refinancing rate is set to remain at 2.15%, while the deposit facility rate will stay at 2%. Investors will also pay close attention to the ECB Staff Macroeconomic Projections to be released after the meeting, which will provide updated growth and inflation forecasts. Between June 2024 and June 2025, the ECB cut borrowing costs by 200 basis points, pausing in July. Markets currently expect rates to remain on hold through year-end, with a potential return to tightening in late 2026. Meanwhile, Eurozone growth is projected at 1.2% this year, 1.1% in 2026, and 1.4% in 2027, though political instability in countries such as France and Spain could cloud the outlook.