Economic resilience withstands headwinds, European Central Bank's third "stand pat".

The European Central Bank, as expected, kept interest rates unchanged at its latest meeting on Thursday. The bank maintained the key deposit rate at 2%, marking the third consecutive meeting without a change, with the last rate cut back in June of this year. The rate cut at that time was in response to the Eurozone inflation rate hitting the 2% target, as part of a cycle of rate cuts that has brought rates down from a historical high of 4% last year. In its statement on Thursday, the European Central Bank stated, "Inflation rates remain close to the medium-term target of 2%, and the assessment of the Governing Council's inflation outlook remains broadly unchanged." The statement also said, "Despite a challenging global environment, the economy continues to grow. A strong labor market, robust balance sheets in the private sector, and past rate cuts by the Governing Council remain important sources of economic resilience." However, the bank also warned, "The outlook remains uncertain, particularly due to ongoing global trade disputes and geopolitical tensions." Although the Eurozone inflation rate rose slightly to 2.2% in September, up from 2.0% in August, this was mainly attributed to higher service prices, and economists had previously indicated that the central bank is likely to take a cautious approach to adjusting interest rates. Preliminary growth data for the Eurozone released earlier on Thursday showed a 0.2% increase in economic growth in the third quarter, higher than expected, strengthening expectations that the European Central Bank will keep interest rates unchanged. The data indicate that despite the widespread uncertainty caused by U.S. trade tariffs, the economy continues to show resilience. The European Central Bank has repeatedly stated that its rate decisions will be based on a "meeting-by-meeting, data-dependent" approach, and reiterated this position on Thursday. However, senior bank officials have indicated earlier this month that the rate cut cycle is nearing an end. Martin Kocher, a member of the European Central Bank's Governing Council and the Governor of the Austrian National Bank, stated that as long as there are no "dramatic" changes, the situation in Europe is "manageable." Kocher, speaking at the International Monetary Fund and World Bank annual meetings in Washington, said, "At the moment, I see the situation as good. Therefore, there is no reason to adjust policy as long as there are no changes that force action. From a more macro perspective, yes, the rate cut cycle is nearing its end, but there is no reason to make commitments at this stage." In another interview, Franois Villeroy de Galhau, a member of the European Central Bank's Governing Council, suggested a "flexible and pragmatic" approach to the interest rate path, adding, "We are in a favorable position...but a favorable position is not fixed." A survey conducted in mid-October showed that most economists expect the European Central Bank to keep the deposit rate unchanged this year, with 45 out of 79 economists surveyed (57%) predicting that the rate will remain unchanged by the end of 2026.