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2025-10-30 22:16:38
[Capital Economics: ECB Holds Rates Steady as Expected, May Cut Rates in 2026] Jack Allen-Reynolds of Capital Economics stated in a report that the European Central Bank's decision to keep its deposit rate unchanged at 2.0% and provide no guidance on future rate decisions was entirely in line with expectations. However, he noted that economic activity and inflation data in 2026 could ultimately prompt the central bank to cut rates. "The key is that the Governing Council has little incentive to adjust rates in the near term, and we agree with the market's pricing expectation that the deposit rate will likely remain at 2% for the next six months or so." However, Allen-Reynolds stated that growth is expected to remain sluggish, and inflation will further fall below the 2% target, exceeding most people's expectations. He anticipates two rate cuts next year.
