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Essentials of Monetary Policy

European Central Bank Stays on Hold

October 30, 2025
Mirza Shaheryar Baig
Foreign Exchange Strategist

According to the European Central Bank (ECB)

  • The ECB kept rates unchanged at 2.00%, in line with expectations.
  • The central bank is firmly on hold, but we believe it is premature to call an end to the rate cut cycle.

Implications

The ECB was content to wait at 2% as widely expected by the market.

 

There are no new projections at this meeting. While the data since the September meeting have been on the softer side, the monetary policy statement did not shift materially in a dovish direction. In fact, references to “robust” labour market, and effect of “past interest rate cuts” indicates a slight hawkish drift.

 

We have removed our call for the ECB to cut rates at the meeting December 18. However, in contrast to market expectations, we do not think the rate cut cycle has ended. We are penciling in a 25-bps cut in March 2026.

2025 Schedule of Central Bank Meetings

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