ECB Holds Rates; Easing Cycle Near End

The European Central Bank left its key rates unchanged, keeping the deposit rate at 2% for a third straight meeting and saying policy is 'in a good place' as President Christine Lagarde reiterated a meeting-by-meeting, data-dependent approach. The pause follows eight cuts from a 4% peak earlier in the year, and inflation has hovered around the ECB’s 2% target while the eurozone unexpectedly grew 0.2% in Q3, helped by France, Spain and resilient domestic demand. Policymakers warned the outlook remains uncertain—citing global trade disputes, higher U.S. tariffs, geopolitical tensions and domestic strains such as France’s budget crisis—and offered no forward guidance on future moves. Markets reacted little, with the euro trading around $1.155–1.157 and bond yields broadly unchanged, and swap markets and many economists increasingly viewing the easing cycle as likely over. The ECB’s cautious hold contrasts with the U.S. Federal Reserve, which has cut rates for a second consecutive meeting, leaving investors focused on Lagarde’s press conference for clues on whether cuts will resume or rates will stay on hold into 2026.