Christine Lagarde, President of the European Central Bank (ECB), explains the ECB’s decision to leave key rates unchanged at the September policy meeting and responds to questions from the press.
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This section below was published at 12:15 GMT to cover the European Central Bank’s (ECB) monetary policy announcements and the immediate market reaction.
The European Central Bank (ECB) announced on Thursday that it left key rates unchanged following the September policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.15%, 2.4% and 2%, respectively.
ECB policy statement key takeaways
“Inflation is currently at around 2% medium-term target and the ECB’s assessment of inflation outlook is broadly unchanged.”
“ECB staff projections present a picture of inflation similar to that projected in June.”
“For inflation excluding energy and food, ECB expects an average of 2.4% in 2025, 1.9% in 2026 and 1.8% in 2027.”
“ECB will follow a data-dependent and meeting-by-meeting approach to determining appropriate monetary policy stance.”
“ECB’s interest rate decisions will be based on its assessment of inflation outlook and risks surrounding it, in light of incoming economic and financial data, as well as dynamics of underlying inflation and strength of monetary policy transmission.”
“ECB is not pre-committing to a particular rate path.”
“APP and Pandemic Emergency Purchase Programme (PEPP) portfolios are declining at a measured and predictable pace, as Eurosystem no longer reinvests principal payments from maturing securities.”
“ECB’s new inflation forecast: 2.1% in 2025, 1.7% in 2026 and 1.9% in 2027.”
“ECB’s new growth forecast: 1.2% in 2025.”
“ECB’s new growth forecast for 2026 is now slightly lower, at 1.0%, while the projection for 2027 is unchanged at 1.3%.”
“ECB’s new core inflation forecast: 2.4% in 2025, 1.9% in 2026 and 1.8% in 2027.”
Market reaction to ECB policy decisions
EUR/USD edged lower with the immediate reaction and was last seen losing 0.2% on the day at 1.1672.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.34% | -0.05% | -0.24% | 0.37% | -0.74% | -0.49% | 0.21% | |
| EUR | -0.34% | -0.41% | -0.50% | 0.02% | -1.08% | -0.79% | -0.14% | |
| GBP | 0.05% | 0.41% | -0.20% | 0.43% | -0.68% | -0.39% | 0.27% | |
| JPY | 0.24% | 0.50% | 0.20% | 0.52% | -0.53% | -0.41% | 0.45% | |
| CAD | -0.37% | -0.02% | -0.43% | -0.52% | -1.01% | -0.81% | -0.17% | |
| AUD | 0.74% | 1.08% | 0.68% | 0.53% | 1.01% | 0.29% | 0.95% | |
| NZD | 0.49% | 0.79% | 0.39% | 0.41% | 0.81% | -0.29% | 0.66% | |
| CHF | -0.21% | 0.14% | -0.27% | -0.45% | 0.17% | -0.95% | -0.66% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
This section below was published as a preview of the European Central Bank’s (ECB) monetary policy announcements at 05:00 GMT.
- The European Central Bank is set to maintain key rates for the second consecutive meeting on Thursday.
- The focus is on hints on the ECB’s interest rate outlook amid stronger-than-expected Eurozone inflation and growth.
- The ECB policy announcements and updated forecasts are expected to rock the EUR/USD pair.
The European Central Bank (ECB) is widely expected to hold its key interest rates following the September monetary policy meeting. The decision will be announced on Thursday at 12:15 GMT.
The interest rate decision will be accompanied by the staff’s updated economic projections, followed by ECB President Christine Lagarde’s press conference at 12:45 GMT.
The ECB policy announcements are set to stir the EUR/USD pair, as the Euro (EUR) traders will closely scrutinize the policy statement and President Lagarde’s remarks for any hints of whether the central bank is done with its easing cycle.
What to expect from the ECB interest rate decision?
Since the rate cut pause in July, the United States (US) and the European Union (EU) agreed on a trade deal, setting out 15% blanket tariffs on EU exports to the US.
The Eurozone economy growth, as measured by the Gross Domestic Product (GDP), expanded by 0.1% in the three months to June after rising by 0.6% in the previous quarter, beating the market expectations of no growth.
Meanwhile, the old continent’s Harmonized Index of Consumer Prices (HICP) rose at an annual rate of 2.1% in August, after having risen 2% in July. The reading beat the estimated 2% figure while moving above the central bank’s 2% target.
With a hotter-than-expected August inflation rate, an upbeat second-quarter GDP and the US-EU trade deal, a rate on-hold decision by the ECB is fully baked in.
However, the key question now is whether the ECB will explicitly mention an end to its rate-cutting cycle on Thursday.
“The swaps market price-in 75% odds of a 25 basis points (bps) cut in the next 12 months,” analysts at BBH noted.
In contrast, a majority of the economists polled by Reuters showed that the ECB is done lowering rates.
Further, industry experts and analysts suggested that ECB President Lagarde and some of her colleagues have set a high bar for future rate cuts, and only a deterioration in the growth outlook and a sustained deflationary trend could persuade the ECB to resume its easing trajectory.
Previewing the ECB policy announcement, analysts at TD Securities (TDS) said: “The press conference will focus on economic resilience and lower trade uncertainty.”
“When probed on risks, President Lagarde is likely to maintain that the Governing Council is well-positioned, without explicitly hinting at future rate cuts,” TDS analysts added.
How could the ECB meeting impact EUR/USD?
EUR/USD remains close to its highest level since late July in the run-up to the ECB event risk. Rising expectations of divergent policy outlooks between the ECB and the US Federal Reserve (Fed) favor Euro optimists.
Meanwhile, the French parliament voted on Monday to oust Prime Minister Francois Bayrou and his minority government over its fiscal reform plans. President Emmanuel Macron will scout for his fifth prime minister in less than two years.
However, the deepening political crisis in the Eurozone’s second-largest economy is unlikely to have a significant impact on the central bank’s decision and forecast this week.
Back in July, ECB President Lagarde said that the central bank is in a “good place to hold and watch”.
In case the ECB Monetary Policy Statement (MPS) or President Lagarde conveys the same message that the central bank maintains prudence on policy outlook or explicitly signals that it is done with rate cuts, it could provide extra legs to the ongoing EUR/USD uptrend.
Any upward revisions to the inflation and growth forecasts for 2025 could also be read as hawkish, bolstering the main currency pair.
Conversely, EUR/USD could face intense selling pressure if the quarterly staff projections unexpectedly show lower growth and inflation for this year.
The downside could also unfold if the ECB refrains from providing any hints on the direction of the next interest rate move.
“EUR/USD challenges the critical 21-day Simple Moving Average (SMA) at 1.1678. However, the 14-day Relative Strength Index (RSI) indicator holds firm above 50, signalling that upside bias remains intact for the main currency pair despite the latest pullback from over two-month highs.”
“On the upside, buyers could retest the nine-week highs at 1.1780, above which the July high of 1.1830 will be targeted. Further up, all eyes will be on the 1.1900 round figure. Conversely, a sustained break below the 21-day SMA and the 50-day SMA confluence support zone near 1.1670 will open up a fresh downside toward the 1.1600 threshold. The August 27 low of 1.1574 could act as a tough nut to crack for sellers,” Dhwani added.