"The decision to hold the deposit rate at 2% reflects a cautious approach as inflation remains close to the ECB's 2% target and Eurozone growth remains subdued, recorded at 0.2% for the third quarter of 2025. After a series of interest rate cuts over the past two years, the ECB now appears to be entering a period of consolidation - potentially marking the end of the recent easing cycle."
"But a consistent interest rate has its benefits. For consumers and businesses, stable interest rates help preserve credit conditions and support investment in an otherwise slow economy. A more certain environment should increase business confidence, encouraging European companies to be more ambitious in their growth plans. Households may also benefit from steadier borrowing costs, though the broader impact will depend on how quickly economic momentum picks up."
"A cut in interest rates could be considered next year if inflation continues to cool and growth weakens further, but the ECB is currently favouring stability - preferring to hold steady and assess the balance between falling inflation and faltering growth, creating a more certain economic environment for corporates and consumers to navigate."
ECB kept the deposit rate at 2% for the third consecutive decision, reflecting a cautious stance as inflation remains close to the 2% target and Eurozone growth was 0.2% in Q3 2025. After a series of interest rate cuts over the past two years, policy appears to be entering a consolidation phase that could mark the end of the recent easing cycle. Policymakers have shifted to a 'wait and watch' posture while assessing whether inflation will continue to cool and whether growth will stabilise or weaken further. Stable rates help preserve credit conditions, support investment, and foster business and household confidence. A rate cut may be considered next year if inflation cools and growth weakens further.
Read at London Business News | Londonlovesbusiness.com
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