The European Central Bank is expected to leave its deposit rate at 2.5% on October 29, according to Bloomberg’s October 23 survey. Economists see a pause as tighter financial conditions weigh on growth, while inflation remains well above the bank’s 2% target.
The economic backdrop has softened. October’s flash eurozone composite purchasing managers’ index fell to 51.9 from 53.1 in September, an economic review showed. The reading still signals expansion, but at a slower pace, with France a particular source of weakness.
Rising long-term bond yields are also increasing borrowing costs independently of further ECB action. Bloomberg’s survey found more than two-thirds of economists judged conditions worse than the bank’s September baseline, complicating its response to the energy-driven inflation shock.
A pause would not necessarily end the tightening cycle. Most respondents expect a quarter-point increase to 2.75% in December, followed by a prolonged hold. Some bank forecasts envisage additional tightening into March 2027, underscoring disagreement over the eventual peak.
The ECB’s September decision emphasized a data-dependent, meeting-by-meeting approach without committing to a rate path. The October hold remains a forecast: policymakers must weigh incoming inflation data, underlying price pressures and the transmission of earlier policy moves.
