ECB holds interest rates at 2% for a fourth time

The European Central Bank left interest rates unchanged for a fourth straight meeting as inflation hovers around target and the euro zone weathers global shocks. The deposit rate was kept at 2% on Thursday - as predicted by all analysts in a Bloomberg survey. Policymakers continued to offer no guidance on future steps, stressing that they'll act one meeting at a time based on incoming data. Fresh forecasts accompanied the decision, envisaging firmer economic expansion and inflation returning to 2% in 2028 after falling short of that level during the next two years.126067164 The updated assessment "reconfirms that inflation should stabilise at the 2% target in the medium term," ECB said in a statement. The euro erased an earlier drop to trade about $1.1733. Bunds edged down, with the 10-year yield one basis point higher at 2.87%. Most ECB officials had already signaled that the inflation undershoot requires no immediate action, with analysts in a separate poll suggesting borrowing costs could remain where they are through 2027. That's not the case everywhere. The Bank of England cut rates earlier in the day after a similar move last week by the Federal Reserve. Both may loosen further next year. Investors, though, have been discounting the chance of further easing globally and have begun betting on a first increase by the ECB as early as 2026. The backdrop to this week's meeting is an economy that looks sturdier than it has in recent months, having maintained expansion through the worst of the trade strife and even surpassed expectations in the third quarter. Business surveys published by S&P Global signal steady momentum in the final months of the year, with fiscal stimulus in Germany to help underpin growth beyond that.126067158 On inflation, officials have signaled they're ready to accept the prospect of prices growing at less than their targeted pace for some time. Executive Board member Isabel Schnabel has said she wouldn't be too concerned as long as such deviations are small.126067157 Lithuanian central-bank chief Gediminas Simkus, who'd previously battled to keep the door open to another cut, has also said he no longer sees a need to ease further due to the economy's surprising strength. A prolonged pause for rates would cap the loosening cycle at eight cuts. That would be welcomed by Schnabel, who thinks the next move - whenever it comes - will probably be a hike.