ECB Holds Rates Steady as Euro Zone Economy Shows Resilience

The European Central Bank (ECB) is predicted to maintain its interest rate at 2.00% as inflation steadies at around 2%. Despite holding rates, the euro zone economy faces downside risks with slower than expected growth potential. Fiscal spending, especially from Germany, is watched closely.

The European Central Bank is widely expected to hold its interest rate at 2.00%, as inflation remains steady around the bank's 2% target. This decision is backed by the assessment that the ECB's current policies are robust enough to manage any potential inflation shocks.

Despite a slight increase in inflation to 2.2% in the past month, economists believe that the ECB will keep rates unchanged through 2026. This steady outlook is driven by stable growth predictions and fiscal spending, particularly from Germany, the euro zone's economic powerhouse.

However, economists warn of potential downside risks to economic growth and inflation rates amidst political instability in France and lagging growth optimism in Germany. The euro zone is adjusting better than expected to U.S. trade barriers, keeping inflation risks contained, as per ECB President Christine Lagarde.

(With inputs from agencies.)