ECB to Hold Interest Rates Steady at 2% Amid Stabilizing Eurozone Inflation

The European Central Bank (ECB) is set to maintain its key interest rate at 2% during its meeting on October 30, 2025, continuing a stable trend after eight rate cuts since mid-2024. This decision comes as inflation across the eurozone is expected to hold near the ECB's 2% target, with projections indicating 2.1% for 2025 and a decrease to 1.7% in 2026, according to analysis by Morningstar. Analysts from both Morningstar and Invesco agree that the current rate environment supports corporate borrowing and could stimulate modest growth in 2026.

Despite recent market volatility, eurozone sovereign bond yields have stabilized, with German 10-year bonds yielding 2.55%, their lowest since June. The ECB's December meeting is anticipated to be more pivotal, with a slight possibility of rate cuts emerging due to the slow transmission of policy effects and a stagnant German economy, although a modest recovery is forecast next year.

On a wider scale, the International Monetary Fund's October 2025 World Economic Outlook highlights a slight downward revision in global growth to 3.2% in 2025 and 3.1% in 2026. Growth in developed economies is expected to hold steady around 1.5%, while emerging and developing nations may see growth just above 4%. Global inflation trends are declining but remain uneven across countries, affected by ongoing uncertainties, protectionism, labor supply shocks, and fiscal vulnerabilities. The IMF emphasizes the need for credible policy measures, structural reforms, and careful diplomacy to foster renewed economic momentum.

This economic context positions the eurozone at a critical juncture where balanced monetary policy aims to sustain growth without exacerbating inflation pressures. Market observers watch closely as eurozone policymakers prepare for potential shifts in the coming months, with the ECB’s measured approach reflecting cautious optimism about the region’s economic trajectory.