EUR Higher After ECB Kept Rates Unchanged, But Gains Faded After Press Conference

The European Central Bank kept its key interest rates on hold during its October meeting, maintaining the deposit facility rate at 2.00% as inflation remains close to the central bank’s 2% medium-term target.

Although policymakers noted that the eurozone economy continues to demonstrate resilience, they also warned that global trade tensions and geopolitical risks are clouding their outlook.

Key Takeaways

• All three key ECB interest rates held unchanged: Deposit facility at 2.00%, main refinancing operations at 2.15%, and marginal lending facility at 2.40%
• Inflation assessment broadly stable: Inflation remains close to the 2% target with no major changes to the Governing Council’s outlook
• Economic growth continues: The eurozone economy has kept expanding despite global headwinds, supported by robust labor markets and past rate cuts
• Uncertainty dominates: Ongoing global trade disputes and geopolitical tensions present the primary risks to the outlook
• Data-dependent approach maintained: The ECB reaffirmed its meeting-by-meeting stance with no pre-commitment to a particular rate path

The ECB’s macroeconomic assessment showed little deviation from previous meetings. Their statement noted that past interest rate cuts continue to support the economy through improved transmission of monetary policy. Solid private sector balance sheets and a robust labor market provide additional cushions against external shocks.

Link to official ECB Monetary Policy Statement (October 2025)

During the press conference, ECB President Christine Lagarde continued to emphasize the central bank’s cautious, wait-and-see approach to monetary policy.

In particular, she highlighted three key sources of uncertainty: escalating global trade tensions, ongoing geopolitical conflicts, and potential deterioration in financial market sentiment. These factors have become recurring themes in recent ECB communications, suggesting the central bank remains on guard despite the generally positive economic backdrop.

Link to ECB Governing Council Press Conference (October 2025)

To conclude, Lagarde reiterated that the Governing Council’s interest rate decisions will depend on assessments of the inflation outlook, incoming economic data, underlying inflation dynamics, and the strength of monetary policy transmission.

Market Reactions

Euro vs. Major Currencies: 5-min

The euro, which had been slowly cruising higher thanks to mostly upbeat inflation and growth data from the region’s top economies released earlier in the session, turned broadly higher following the central bank’s decision to keep rates steady as expected.

However, gains were soon unwound after the press conference, as traders likely zoomed in on cautious central bank language highlighting external risks that could influence their policy path.

The shared currency eventually found itself trading below pre-ECB levels against most of its counterparts, with EUR/CHF down 0.10%, EUR/JPY lower by 0.23% and EUR/GBP sliding 0.19% a few hours after the decision and presser.