ECB October 2025 rate decision
The European Central Bank kept interest rates steady as expected at its last meeting on Thursday.
The central bank last cut interest rates in June, keeping the deposit interest rate at 2% for the third consecutive year. The cut, which coincided with euro zone inflation reaching the European Central Bank’s target rate of 2%, was part of a cycle of interest rate cuts that brought rates down from the same period last year. Record level at 4%.
The ECB said on Thursday that “inflation remains close to the medium-term target of 2% and the Governing Board’s assessment of the inflation outlook remains largely unchanged.”
“The economy continued to grow despite the challenging global environment. The strong labor market, solid private sector balance sheets and the Governing Council’s past rate cuts remain important sources of resilience,” the report said.
However, he warned that “the outlook remains uncertain, particularly due to ongoing global trade disputes and geopolitical tensions.”
Eurozone inflation rate It increased to 2.2 percent in September The 2% increase from the previous month was attributed to the increase in prices of services, and economists said the central bank would remain cautious about intervening in interest rates at this time.
Expectations that the ECB will keep interest rates steady were strengthened early on Thursday when euro zone growth data showed the economy grew 0.2% in the third quarter compared to the previous three months. The figure beat expectations and showed that economic activity remained resilient despite prevailing uncertainty about business activity in the wake of US trade tariffs.
Following the ECB’s announcement, the euro reversed previous gains and traded 0.26% below the dollar at $1.1571.
Lighting projected onto the Grossmarkthalle building at the headquarters of the European Central Bank in Frankfurt, Germany, on May 9, 2025, to mark the 75th anniversary of the Schuman Declaration.
Alex Kraus/Bloomberg via Getty Images
The central bank has repeatedly said it will take a meeting-by-meeting, data-driven approach to setting interest rates and reiterated that stance on Thursday. But senior ECB board members told CNBC this month that the easing cycle is approaching or over.
Martin Kocher, a member of the Governing Council of the European Central Bank and governor of the Austrian National Bank, said Europe was “fine” as long as nothing “drastic” happened.
“I think we’re in a good place right now. So there’s no need to change anything unless there are changes that force us to do something,” Kocher told CNBC’s Karen Tso at the IMF and World Bank annual meetings in Washington.
“And if you look at the bigger picture, yes, the easing cycle is nearing its end or has ended, but there’s no point in pre-committing at this stage.”
ECB Governing Council member François Villeroy de Galhau said in a separate interview that he recommended “agile pragmatism” when it comes to the path for interest rates, adding: “We are in a good position… but a good position is not a fixed position.”
While the majority of economists surveyed by Reuters in mid-October said the ECB would keep the deposit rate steady this year, 45 of 79 economists (57%) surveyed said they did not see any change until the end of 2026.
— CNBC’s Tasmin Lockwood and Leonie Kidd contributed to this story.
