The ECB also refrained from offering new guidance on the expected speed and scope of interest rate cuts next year, repeating that it will stick to a “data-dependent and meeting-by-meeting approach.”
“Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2 percent medium-term target on a sustained basis,” the ECB said. Staff trimmed their inflation forecasts for 2025 to 2.1 percent from 2.2 percent and continue to see it averaging 1.9 percent in 2026. The Bank’s first forecast for 2027 puts inflation at 2.1 percent.
The Bank’s staff were slightly more pessimistic on the growth outlook, trimming their 2025 forecast to 1.1 percent from 1.3 percent. They expect it to accelerate to 1.4 percent in 2026 (1.5 percent previously). The first 2027 projections 1.3 percent.
ECB President Christine Lagarde will hold her customary press conference at 2:45 p.m. CET. Financial markets will be looking for any signs that policymakers are increasingly worried about economic headwinds, which have gained strength due to the policy drift in Germany and political gridlock in France. Any such signals could be a hint for more aggressive rate cuts next year.