EconoFACTS

October 30, 2025 | 10:48

ECB: "Your call is important to us. Please hold."

Economist

Jennifer Lee

Senior Economist and Managing Director
Economics

Jennifer has been with BMO Capital Markets Economics for nearly th... (Read more)

Jennifer Lee

Senior Economist and Managing Director
Economics

Jennifer has been with BMO Capital Markets Economics for nearly th... (Read more)

For those faithful readers out there, it was fairly clear that yours truly has been waffling on the ECB call. After the September meeting, knowing that there will be no movement in October (spoiler alert: there wasn't.... the ECB stayed on hold, as was widely expected), the data have been eyed carefully. Given the recent bout of stronger figures, pointing to resilience in the Euro Area economy, we are axing the December rate cut. It looks like the ECB, after slashing the deposit rate in half in a little over a year (from 4% in 2023/2024, to 2% since June) is finished easing. That 200 bps compares to the 300 bps from the RBNZ; 275 bps from the BoC; 225 bps from the Riksbank; 175 bps from the SNB; 150 bps from the FOMC; 125 bps from the BoE; 75 bps from the RBA; and, 50 bps from the Norges Bank.

At the October 30th meeting, the central bank officially announced that the deposit rate would remain at 2.00%, the refi rate at 2.15%, and the marginal lending facility at 2.40%. It cited a "robust" job market, "solid private sector balance sheets", and the impact of past rate cuts. The ECB is not pre-committed to a certain rate path, it will take things meeting by meeting, and it will be data dependent. And so on and so forth. The discussion was "friendly" and the decision was unanimous.

During the press conference, President Lagarde sounded optimistic... even more than in September. She continued to stress that monetary policy is in a "good place" but that the "good place is not fixed". The positive tones were centered on the economy, and that some of the downside risks have faded over the past few weeks, including the EU/U.S. trade deal, the ceasefire in the Middle East, and progress in U.S./China trade. She also sounded optimistic—though a tad less so—on inflation, and that underlying inflation is consistent with the 2% target, as are longer-term inflation expectations. However, the reporters in the room pushed back on the optimism and questioned the risks. President Lagarde acknowledged that while the downside risks to growth have been mitigated recently, the same cannot be said about inflation. In fact, the outlook for CPI is "more uncertain than usual". There is still concern about the trade environment as well as the risk of bottlenecks and supply chain disruptions... a risk that "has not yet materialized".

Bottom Line: It sounds like many central bankers may be taking a step back to breathe...

the FOMC (interesting that there were 2 dissenters, each of a different stripe and that a Dec cut is "not a forgone conclusion")
the BoC (sounds like they believe they are done.... sees current rates "at about the right level")
the BoJ (do I really need to explain?... but I'm stubbornly keeping the year-end rate hike for now)
and now, the ECB, which frankly isn't a huge shock.