ECB Holds Steady: Growth and Inflation in Focus

The European Central Bank kept interest rates unchanged, maintaining a positive stance on growth and inflation. Despite inflation forecast below target, ECB President Christine Lagarde expressed confidence in the economy, while acknowledging risks have balanced. Markets now predict limited rate cuts, and inflation uncertainties persist.

The European Central Bank (ECB) opted to leave interest rates unchanged in its latest decision, signaling optimism regarding growth and inflation within the euro zone. Despite halving rates earlier this year, the ECB remains steady at 2%, citing the region's strong economic standing.

ECB President Christine Lagarde reiterated the institution's stable position, noting that inflation aligns with expectations and the domestic economy remains solid. Recent U.S. tariff agreements and increased German spending contributed to a balanced outlook, though inflation projections for 2027 fall just short of target.

The ECB does not anticipate imminent policy changes, with Lagarde downplaying minor inflation misses as non-critical to rate adjustments. Market reactions reflect this sentiment, as investors now speculate a reduced likelihood of rate cuts, against the backdrop of more certain global trade conditions.

(With inputs from agencies.)