The European Central Financial institution (ECB) saved its deposit charge unchanged at 2.00% on Thursday, marking the second consecutive pause after eight cuts since June 2024.
The unanimous choice got here as inflation hovers across the financial institution’s 2% goal and financial dangers seem extra balanced following latest commerce agreements.
Key Takeaways
- ECB held all three key charges unchanged: deposit charge at 2.00%, most important refinancing at 2.15%, marginal lending at 2.40%
- Resolution was unanimous, marking second consecutive pause after eight cuts since June 2024
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Inflation projections: 2.1% in 2025 (up from 2.0%), 1.7% in 2026 (up from 1.6%), 1.9% in 2027 (down from 2.0%)
- Core inflation forecast: 2.4% in 2025, 1.9% in 2026, 1.8% in 2027
- Progress projections: 1.2% in 2025 (up from 0.9%), 1.0% in 2026 (barely decrease), 1.3% in 2027 (unchanged)
- Lagarde: “The disinflationary course of is over,” and ECB stays “in a very good place.”
- ECB maintains data-dependent, meeting-by-meeting method with no pre-commitment to charge path
- Progress dangers are actually “extra balanced” with commerce uncertainty “clearly diminished” after commerce agreements
Hyperlink to European Central Financial institution Assertion (September 2025)
In her presser, ECB President Christine Lagarde delivered hawkish messaging, declaring that “the disinflationary course of is over” and reiterating that the ECB continues to be “in a very good place” with inflation sitting at their 2% goal.
Most importantly, she characterised dangers to financial development as “extra balanced” than earlier than, whereas noting that commerce uncertainty has “clearly diminished” following latest EU-U.S. commerce agreements that set 15% tariffs on most items.
Regardless of this, Lagarde continued to emphasise that the ECB will “comply with a data-dependent and meeting-by-meeting method” to figuring out coverage, explicitly stating they’re “not pre-committing to a specific charge path.”
The ECB’s up to date projections confirmed blended indicators, elevating 2025 inflation to 2.1% whereas reducing the 2027 forecast to 1.9%, which is under their 2% goal. Nonetheless, Lagarde downplayed this undershoot, stating that “minimal deviations” wouldn’t essentially justify coverage motion. Progress forecasts had been upgraded to 1.2% for 2025, although 2026 was trimmed to 1.0%.
Hyperlink to ECB Press Convention (September 2025)
Market Reactions
Euro vs. Main Currencies: 5-min
Overlay of EUR vs. Main Currencies Chart by TradingView
The euro noticed elevated volatility earlier than the ECB choice, possible as merchants positioned forward of the closely-watched U.S. CPI report. EUR initially weakened following the speed announcement, however shortly reversed larger as mushy U.S. jobless claims information weighed on the greenback, boosting the shared forex towards main counterparts.
The euro prolonged positive factors via Lagarde’s press convention, with merchants scaling again rate-cut expectations. Markets now worth lower than 50% odds of one other ECB minimize via June 2026, down from 60% pre-meeting. Nonetheless, the rally pale hours earlier than the London shut when threat urge for food surged, dragging EUR decrease towards commodity currencies and Sterling even because it maintained positive factors versus secure havens.
The euro completed blended – larger towards USD, JPY, and CAD however decrease towards CHF, AUD, NZD, and GBP – reflecting its middle-ground standing between secure havens and risk-sensitive currencies within the shifting market surroundings.
