The European Central Financial institution (ECB) saved its deposit fee 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 current commerce agreements.

Key Takeaways

• ECB held all three key charges unchanged: deposit fee at 2.00%, fundamental refinancing at 2.15%, marginal lending at 2.40%
• Choice was unanimous, marking second consecutive pause after eight cuts since June 2024
• 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 place.”
• ECB maintains data-dependent, meeting-by-meeting strategy with no pre-commitment to fee path
• Progress dangers at the moment are “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 place” with inflation sitting at their 2% goal.

Most importantly, she characterised dangers to financial progress as “extra balanced” than earlier than, whereas noting that commerce uncertainty has “clearly diminished” following current EU-U.S. commerce agreements that set 15% tariffs on most items.

Regardless of this, Lagarde continued to emphasise that the ECB will “observe a data-dependent and meeting-by-meeting strategy” to figuring out coverage, explicitly stating they’re “not pre-committing to a specific fee 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 beneath their 2% goal. Nevertheless, 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, seemingly as merchants positioned forward of the closely-watched U.S. CPI report. EUR initially weakened following the speed announcement, however rapidly reversed greater as comfortable U.S. jobless claims knowledge weighed on the greenback, boosting the shared foreign money towards main counterparts.

The euro prolonged beneficial properties by way of Lagarde’s press convention, with merchants scaling again rate-cut expectations. Markets now worth lower than 50% odds of one other ECB minimize by way of June 2026, down from 60% pre-meeting. Nevertheless, the rally pale hours earlier than the London shut when danger urge for food surged, dragging EUR decrease towards commodity currencies and Sterling even because it maintained beneficial properties versus protected havens.

The euro completed blended – greater towards USD, JPY, and CAD however decrease towards CHF, AUD, NZD, and GBP – reflecting its middle-ground standing between protected havens and risk-sensitive currencies within the shifting market setting.