No surprise from the ECB: Central bank continues to pause interest reductions

The Council of the European Central Bank (ECB) decided on Thursday to leave the key interest on unchanged. The ECB thus confirms the interest rate level and follows the expectations of most economists who had located the banking rate at 2.00 percent.

The ECB should justify its decision by the fact that the current interest rate level is appropriate in order to bring inflation back to two percent in the medium term. The focus is now on the subsequent press conference, in the ECB President Christine Lagarde will explain the attitude of the central bank.

In the run -up to the decision, analysts had expressed uncertainty regarding further interest steps, which confirmed the attitude of the ECB not to make hasty decisions. In addition, the ECB presents its current staff forecasts for growth and inflation, which provides information about the current assessment of the economic situation. In addition, Lagarde’s statements about the latest political developments in France and a possible intervention by the ECB on the bond market are expected.

Already in July the ECB had not touched the key interest – not least because of the “exceptionally uncertain environment” in the customs dispute with the USA, as ECB President Christine Lagarde emphasized at the time. Now Europe is dealing with a government crisis in France. There is great concern that the debt of the second largest euro folk economy is out of control.

ECB in lurk position

In this environment, the central bank remains after a series of interest reductions in the way. Previously, the ECB had reduced the key interest rates eight times within a year. In the spring of 2024, the deposit rate that banks received was twice as high at 4.0 percent when they park money at the ECB.

Many economists expect the ECB that interest rates will no longer touch this year: the excessive inflation is under control – in August the rate of inflation in the euro area was 2.1 percent in the target area of ​​the ECB – and the economy in the euro area was robust despite higher US tariffs. And given the many crises, a lot suggests that the central bank wants to keep all options open.

For the time being, peace in the customs dispute

US President Donald Trump remains unpredictable, but the scenario of an escalation in the customs dispute and a shock for the economy failed to do so. In spring, some central bankers, especially from southern Europe, had pleaded for further interest reductions for worries about the economy.

Lower interest rates support the economy because loans for companies and consumers tend to become cheaper. Savers, on the other hand, are at a disadvantage: If banks receive fewer interest rates for funds parked at the ECB, they usually lower daily and fixed deposit interest for their customer body.

However, the comparison portal Verivox sees a trend reversal: for the first time since February 2024, the average interest rates nationwide have increased overnight offers to 1.28 percent. The interest rates also climbed over all terms when the fixed deposits.

Wang about France’s debt

While inflation is contained, the ECB threatens a new stove with France. The risk premiums for French government bonds have increased significantly: the return of ten -year -old French bonds is above that of papers from Greece. New debts are becoming increasingly expensive for France.

In terms of economic output, Germany’s neighboring country with 114 percent has the third highest debt rate in the EU to Greece and Italy. France’s budget deficit recently was 5.8 percent well above the European limit of 3.0 percent of economic output.

Does the ECB buy government bonds again?

At the financial markets, it is speculated whether the ECB France would support bond purchases. In the event of a crisis, the central bank can buy unlimited bonds of individual euro states as part of its TPI program (“Transmission Protection Instrument”). However, there are high hurdles for this: The instrument is intended in the event that the interest rates for securities of a euro -state through financial speculation are disproportionately strong.

Lagarde: ECB continues to be “well positioned” – disinflation over

According to ECB President Christine Lagarde, the European Central Bank (ECB) is with its current one Monetary policy “continue to be well positioned”. However, this does not mean that the ECB is in advance, Lagarde said in the press conference after the ECB council meeting. “We have to make sure that we continue to be well positioned,” she added. According to Lagarde, the last observing disinflation process is over. However, the ECB will still not give a balance of inflation risks according to the pattern of growth risks.

As expected, the ECB council had previously decided to leave the key interest unchanged. The committee did not make explicit statements about the further interest rate. It wants to continue to determine its monetary policy from a session to the session and orientate itself to the latest data. According to Lagarde’s statement, the interest decision was unanimous.

Lagarde: growth risks are more balanced

According to ECB President Christine Lagarde, the Central Central Bank’s Central Bank (ECB) sees a lesser risk than before that economic development in the euro area is worse than expected. “The risks of economic growth are somewhat more balanced,” said Lagarde at the press conference after the ECB council meeting. In July, the ECB spoke of downward risks. Growth could be greater than expected due to higher armaments and infrastructure expenditure. The growth could also support higher productivity. Lagarde described the inflation outlook as “unusually unsafe”, which was mainly due to the trade conflicts. The stronger euro could drop inflation more clearly than expected. According to Lagarde, surveys indicate persistent growth in the processing and non-processing of businesses. Consumers divide less and the effect of the ECBInterest rate Starting to show itself, she said. As expected, the ECB council had previously decided to leave the key interest unchanged. The committee did not make explicit statements about the further interest rate. It wants to continue to determine its monetary policy from a session and orientate itself to the current data.

Lagarde: Low inflation forecast for 2027 not overestimated

The European Central Bank (ECB) measures the falling for the ECB inflation goal in the staff forecast for 2027, according to ECB President Christine Lagarde, initially not particularly important. “As we have clarified in our strate test, a reaction to minimal deviations from the inflation goal is not necessarily as long as they remain temporarily,” said Lagarde at the press conference after the ECB council meeting. The ECB rod had raised its inflation forecast for 2026 to 1.7 (previously: 1.6) percent, but reduced it to 1.9 (2.0) percent for 2027.

As expected, the ECB council had previously decided to leave the key interest unchanged. The committee did not make explicit statements about the further interest rate. It wants to continue to determine its monetary policy from a session to the session and orientate itself to the latest data.

Redaktion finanzen.net with material from dpa-fx and Dow Jones Newswires