ECB eyes keeping rates steady for now, show minutes
FRANKFURT
The European Central Bank believes current interest rate levels are robust enough in "managing shocks", minutes of its September meeting showed, fueling expectations of no further cuts for now.
The ECB kept its key rate steady at two percent for a second straight meeting last month, following several reductions.
A summary of the meeting showed that policymakers "argued that the current level of interest rates should be seen as sufficiently robust in managing shocks."
The minutes added to the sense of cautious optimism about the eurozone, with policymakers believing risks to growth were "now more balanced", meaning no changes to rates were needed.
It noted however heightened uncertainty due to "volatile global trade policy" and "geopolitical developments." Europe has been a key target for U.S. President Donald Trump in his tariff blitz.
But the uncertain environment was an argument for keeping rates on hold, which would allow time to assess the impact of tariffs, according to the minutes.
ING bank economist Carsten Brzeski said the minutes showed the ECB governing council believes that keeping rates steady was "the most appropriate response to ongoing elevated uncertainty."
The central bank could be compelled to make further rate cuts due to factors like worsening political instability in France or a bigger than expected hit from U.S. tariffs, he said.
But if none of these risks materialise, Breszki said he expects that "interest rates will remain on hold for the next two years".
