Rate call: ECB signals steady stance; policy minutes hint at openness to cuts next year

The European Central Bank (ECB) sees interest rates as appropriately placed for now but has left room for potential cuts in 2026, according to minutes of its October meeting released on Thursday, AFP reported.The minutes showed that October’s unanimous decision to hold the key deposit rate at 2 per cent reflected broad agreement with Chief Economist Philip Lane’s view that inflation was under control. “Most measures of longer-term inflation expectations continued to stand at around two percent,” the minutes noted, adding that global economic activity showed signs of resilience.After two years of rate reductions, the ECB has kept rates unchanged for the past three meetings as inflation has retreated from a 2022 peak of 10.6 per cent to near the central bank’s two per cent target.However, concerns around slowing wage growth and subdued eurozone momentum — both weighing on inflation — have prompted some observers to anticipate rate cuts next year. The minutes confirmed that ECB members discussed the need to remain “entirely open-minded” about future easing.“While the economy was not so weak that it definitely implied an undershooting of the target over the medium term, it remained uncertain whether the economy had enough momentum to deliver the target,” the minutes said. They added that the governing council was “currently in a good place from a monetary policy point of view, though this should not be seen as a fixed place.”The ECB’s governing council will meet next on December 18, when it will unveil fresh economic projections extending for the first time to 2028.