The following is a version of Carolane De Palmas, a shopping analyzer at Retail FX and CFDS Broker Activetrades.
With inflation in the euro zone more than 2%, but it is expected to be relegated in 2026 and growth projections have been subjected to, interest rates see little benefit to adjustment policy now. For market participants, the central bank is very likely to keep interest rates on waiting, with the risks leaning towards a prolonged inflation period below the target and not in another flame in price rise.
Eurozone inflation hits five months
Inflation of the Euro -region occurred higher in September, complicating European Central Bank policy, as officials are preparing for their meeting in October. Consumer prices rose by 2.2% compared to the previous year, from 2% in August and the highest reading since April, according to Eurostat. The increase is due to a slower decrease in energy costs, while basic inflation has been stable. Inflation of services, however, increased to 3.2%, marking that underlying prices have not yet been fully facilitated.
While inflation has been reduced abruptly by its post-fantasy peaks, ECB’s lead economist Philip Lane said it is unlikely to return to the low-leggings-or rising well above the target 2%-beyond the medium term. Still, the picture remains uneven throughout the block. Estonia published the highest annual inflation rate in September at 5.2%, followed by Croatia and Slovakia at 4.6%, while Latvia, Austria and Spain also recorded readings well above the ECB target.
ECB views show inflation that underlines its target
Despite the recent increase, policy -makers are increasingly concerned about inflation that slides under the target in the coming years. ECB President Christine Lagarde said this week that inflation is “unlikely to grow far up, or fall far down” its target 2% in the coming months, as commercial disorders easy and growth potential is drifting away.
Fresh staff forecasts show that average inflation is on average of 2.1% in 2025, before it is reduced to 1.7% in 2026 and 1.9% in 2027, with the exception of food and energy, inflation is predicted to 2.4% in 2025, mitigating 1.9% in 2026 and 1.8% in 202 keeping a lid on the prices.
Growth prospects remain fragile
The increase in the euro area continues to lose the momentum. The seasonally customized GDP expanded only 0.1% in the second quarter of 2025, according to a recent Eurostat estimate, a sharp deceleration of 0.6% in the first three months of the year. On an annual basis, production increased by 1.5%, only marginally below 1.6% recorded in the previous quarter.
Performance varies widely in all Member States. Denmark led by a quarterly increase of 1.3%, while Croatia and Romania published 1.2%. In contrast, Finland was associated by 0.4%, Germany by 0.3%and Italy by 0.1%, stressing the uneven recovery throughout the block.
ECB staff promotes the eurozone economy will extend by 1.2% in 2025 – reinforcing stronger than June’s forecasts, but still submits to historical standards. The increase is expected to slow down at 1.0% in 2026 before the event by 1.3% in 2027. Policy -in charge show tariffs, a more stable euro and increasing global competition as in the short term, although they expect new trade and uncertainty.
The ECB is expected to stop interest rates as inflation prospects stabilize
The ECB is expected to leave the borrowing costs unchanged at its meeting in October, marking a third straight pause. At the September rally, the Board of Directors chose attention and Lane’s recent comments show that policy makers are still concerned about inflation that falls below the target of overcoming. The pricing of future fulfillment compiled by LSEG Refinitiv shows that investors are overwhelming that the deposit rate will remain at 2% by the end of the year.
Sources: Wall Street Journal, Reuters, ECB, Eurostat, Euronews
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