The European Central Bank (ECB) is expected to maintain its current interest rates at its meeting on Thursday, marking the third consecutive meeting with no changes. This decision is largely due to inflation hovering around the bank’s 2% target and the eurozone economy showing resilience. Following a series of cuts last year, the ECB has kept its key deposit rate steady at 2% since July.

Inflation has stabilized around the central bank’s target, and the eurozone has weathered the US tariff onslaught better than initially anticipated. As a result, officials have signaled that they are not keen on cutting rates further at this time. Jose Luis Escriva, Spain’s central bank chief and a member of the ECB’s rate-setting governing council, recently stated that the “current level of interest rates is appropriate.”

The ECB’s decision may be influenced by the US Federal Reserve’s recent rate cuts, aimed at addressing concerns over the cooling labor market. However, the ECB is unlikely to follow suit, given the eurozone economy’s improved footing. The bank raised its eurozone growth forecast for this year in September, easing pressure for a rate cut.

Despite the positive outlook, the ECB faces headwinds, including the French political crisis and the risk of further trade tensions. These concerns have sparked debate about the possibility of future rate cuts. Some analysts believe that the ECB may need to cut rates later, citing the potential risks to inflation. UniCredit analysts noted that rate-setters appear split on the balance of risks to inflation and the need for an “insurance” cut in the coming months.

Lithuanian governing council member Gediminas Simkus has called for a rate cut at the ECB’s next meeting in December, citing the potential risks of a strong euro and slowing wage growth. Economist Andrew Kenningham expects the ECB to cut rates further in 2026 as inflation and wage growth cool. The ECB’s decision will be closely watched, and President Christine Lagarde’s press conference will be scrutinized for any hints on the future trajectory of interest rates. With the eurozone economy on a better footing, the ECB’s decision to hold rates steady is seen as a vote of confidence in the region’s economic resilience.