The European Central Bank appeared ready to end 2025 in a rare position of relative comfort. Inflation was close to target, growth had been more resilient than expected, and economists saw little reason for either immediate easing or renewed tightening. After several years of crisis management, the policy debate was shifting toward how long rates could simply stay unchanged.
A Reuters poll found unanimous expectations that the ECB would keep its deposit rate at 2% at the December meeting.
Why this is happening
Euro-area inflation had risen slightly to 2.2% in November from 2.1% in October, still close to the 2% target. Economists expected euro-area growth of roughly 1.4% in 2025 and 1.1% in 2026.
A central bank can hold rates steady when policy is neither clearly too restrictive nor too loose. If inflation expectations are anchored and growth is positive, changing rates can create more risk than benefit. The ECB also has to consider that monetary policy acts with long delays, meaning earlier rate cuts were still working through mortgages, corporate borrowing, and investment.
The broader read-through
A prolonged hold would give businesses and governments a more predictable financing environment. It would also shift attention away from Frankfurt and toward fiscal policy, productivity, and structural reform. For heavily indebted countries, stable rates provide relief, but they do not eliminate the need to control deficits.
The next signal
The risk list is still familiar: asymmetric shocks. A sharp growth downturn could reopen the case for cuts, while renewed energy inflation or stronger wage pressure could force the ECB to tighten again. For now, however, the euro area appeared to be entering 2026 with monetary policy closer to neutral than it had been in years.