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2025-12-18 11:04:42
[ECB Meeting Preview: Interest Rates Expected to Remain Unchanged, Eurozone Growth Remains Robust] 1. With interest rates expected to remain unchanged and the outlook improving, the market perceives minimal short-term policy risks, further reinforcing the euro's range-bound trading pattern. 2. The European Central Bank (ECB) is expected to keep interest rates unchanged at its policy meeting on Thursday, reinforcing the view that the easing phase has ended as the Eurozone economy demonstrates greater resilience and inflation remains anchored near the target. The policy statement will be released at 21:15 Beijing time, followed by a press conference by ECB President Christine Lagarde half an hour later (21:45 Beijing time). 3. Recent economic data exceeding the ECB's own forecasts have eased concerns that global trade disruptions will significantly weaken growth. Exporters' resilience to US tariff pressures has exceeded expectations, while stronger domestic demand in Germany has helped offset continued weakness in manufacturing activity across the Eurozone. These dynamics have collectively enabled the Eurozone economy to expand at a pace close to its potential growth rate. 4. Inflation trends support the rationale for maintaining policy stability. Overall inflation has been hovering near the ECB's 2% target, primarily driven by robust increases in service sector prices, while underlying price pressures appear to be under control. With medium-term inflation expected to remain near the target, policymakers are seen as having no urgency to adjust interest rates in either direction. 5. Against this backdrop, the ECB is likely to slightly raise its growth and inflation forecasts, effectively ending the year-long rate-cutting cycle that has halved the policy rate from its peak. While there has been some speculation about potential future rate hikes, such discussions are widely considered premature given the persistent spare capacity in manufacturing and the only early signs of industrial recovery. 6. ECB President Christine Lagarde is not expected to provide guidance on the direction of the next policy action, instead emphasizing data dependence and the need to assess the evolving situation. Market consensus suggests that interest rates will remain unchanged at least until 2026 and 2027, reinforcing the view that the ECB is satisfied with its current stance.
