Economic resilience withstands headwinds, European Central Bank holds steady for the third time

According to the Zhitong Finance APP, the European Central Bank (ECB) maintained interest rates at the latest meeting on Thursday as expected. The key deposit rate remains at 2%, marking the third consecutive time it has been kept unchanged, with the last rate cut occurring in June of this year. That rate cut coincided with the eurozone's inflation rate reaching the 2% target, as part of a rate-cutting cycle that has seen rates fall from a historical high of 4% last year. In a statement on Thursday, the ECB noted, "Inflation remains close to the medium-term target of 2%, and the Governing Council's assessment of the inflation outlook has largely remained unchanged." The statement added, "Despite the challenging global environment, the economy continues to grow. A strong labor market, robust private sector balance sheets, and the Governing Council's past rate cuts remain important sources of economic resilience." However, the central bank also warned that "the outlook remains uncertain, particularly due to ongoing global trade disputes and geopolitical tensions." Although the eurozone's inflation rate rose slightly to 2.2% in September, up from 2.0% in August, this was mainly due to rising service prices, and economists have previously indicated that the central bank is likely to take a cautious approach to adjusting interest rates at this time. Preliminary growth data for the eurozone released earlier on Thursday showed a quarter-on-quarter economic growth of 0.2% in the third quarter, a figure that exceeded expectations and reinforced the view that the ECB would keep interest rates unchanged. This data indicates that, despite the widespread uncertainty in business activities caused by U.S. trade tariffs, the economy remains resilient. The ECB has repeatedly stated that its interest rate decisions will be made "on a meeting-by-meeting basis, relying on data," and reiterated this stance on Thursday. However, senior officials at the central bank have indicated this month that the rate-cutting cycle is nearing or at its end. Martin Kocher, a member of the ECB's Governing Council and President of the Austrian National Bank, stated that as long as there are no "dramatic" changes, the situation in Europe is "acceptable." Speaking at the International Monetary Fund and World Bank annual meetings in Washington, Kocher said, "I believe the situation is good at the moment. Therefore, unless there are changes that force us to take action, there is no reason to adjust policy. From a more macro perspective, yes, the rate-cutting cycle is nearing or has already ended, but there is no reason to pre-commit at this stage." In another interview, François Villeroy de Galhau, a member of the ECB's Governing Council, suggested adopting a "flexible and pragmatic" approach to the interest rate path, adding, "We are in a favorable position... but a favorable position is not static." A survey conducted in mid-October showed that the majority of economists expect the ECB to keep the deposit rate unchanged this year, with 45 out of 79 economists surveyed (57%) anticipating that rates will remain unchanged until the end of 2026