ECB Interest Rate Prep

On Thursday the 30th of October at 09:15 ET, the ECB is set to release the results of their latest monetary policy meeting.
Here are some views on what to expect.

Commentary
Wells Fargo
The European Central Bank (ECB) will announce its monetary policy decision next week, and it is widely expected to keep rates on hold. Our outlook aligns with the consensus: the Deposit Rate will remain unchanged at 2.00%.

In Q2, Eurozone GDP grew by just 0.1% quarter-over-quarter and 1.5% year-over-year, with details showing that growth was primarily driven by inventory accumulation and government and household spending. More recently, October’s PMI surveys point to a modest improvement in sentiment, with the composite index rising to 52.2, its highest level since May 2024. On the inflation front, September data showed headline inflation exceeding the ECB’s 2% target, while core inflation also ticked higher. However, wage pressures appear to be easing. Ahead of the ECB’s decision, preliminary Q3 GDP data will be released and are expected to show a slight slowdown to 1.2% year-over-year, with quarterly growth holding steady at 0.1%. Market participants will be closely watching the ECB’s updated staff projections and forward guidance for any signals of potential easing later this year.

That said, we maintain our view that the ECB is on hold through year-end, though risks are tilted slightly toward rate cuts if growth disappoints.
S&P Global Ratings
No change in monetary policy is expected at the ECB, where the October flash PMI data showed benign inflationary pressures accompanying an upturn in the pace of economic growth to one of the highest over the past three years. The region also sees third quarter GDP estimates released alongside October’s official flash inflation print.

Morningstar
After eight rate cuts since mid-2024, the European Central Bank is widely expected to hold interest rates steady on Oct. 30. Inflation is near target, the eurozone economy is stabilizing, and policymakers have signaled little urgency to act. “It seems the ECB will be holding interest rates steady at 2% for the third straight meeting, with economists in a recent poll unanimous on this likely outcome. This is a decision we can certainly see the logic in, given inflation, and the health of the underlying economy,” says Michael Field, chief European markets strategist at Morningstar. He adds that a 2% policy rate is a “reasonable level which should provide solid support for European businesses looking to borrow and invest in the months ahead, and could also lend further strength to regional equity markets.”

Analysts anticipate an uneventful meeting. “I would be amazed if they changed policy rates at the October meeting. The current rate is supportive of the Eurozone economy and, along with the fiscal support that is coming in many countries – especially Germany – I would expect this to boost economic growth in 2026,” says Paul Jackson, global head of asset allocation research at Invesco. Carsten Brzeski, chief economist at ING, agrees that next week’s ECB meeting is unlikely to leave a lasting impact. The December meeting is the one to watch as “chances of a rate cut are still higher than markets currently anticipate,” according to Brzeski.

“Our base case is that we’ve reached the neutral rate. The current level is more or less neutral for the economy, and we expect the ECB to stay here for quite some time,” says Bastian Freitag, head of fixed income Germany at Rothschild & Co Wealth Management. “A further cut would only come if inflation were to undershoot the 2% target more persistently.” While the ECB will keep all options open and not give forward guidance, at this stage there’s no pressure to act in either direction, he says. In a speech this week, ECB chief economist Philip Lane reinforced this cautious stance, and added that “the governing council is not pre-committing to a particular rate path.” He noted that financial conditions have become “noticeably less restrictive, supported by lower short-term interest rates and higher valuations for risk assets, although this has been partly offset by a stronger euro.”