ECB Meeting Accounts: Further Rate Cut Could Shield Inflation Target, but Upside Risks Support Hold

9 October 2025

By Marta Vilar – MADRID (Econostream) – A further rate cut in the coming months could help protect the European Central Bank’s inflation target under both the baseline outlook and adverse scenarios, but upside risks argued for leaving policy rates unchanged, the accounts of the Governing Council’s latest meeting showed Thursday.

“While a further rate cut in the coming months would better protect the inflation target both under the baseline and across a range of adverse scenarios, the materialization of upside risks would instead warrant maintaining the current level of the policy rate,” the document said.

Several members judged inflation risks to be tilted to the downside, pointing to the euro’s appreciation, trade tensions and goods rerouting from countries with overcapacity, according to the accounts.

Others highlighted upside risks, citing resilient domestic demand, firms’ profit margin rebuilding and potentially inflationary tariffs.

This group of policymakers argued the economy was “more resilient than had been expected, which made a sustained undershooting of inflation increasingly unlikely,” according to the ECB.

The accounts said that “the current situation was likely to change materially at some point, but it was currently difficult to know when and in which direction.”

Keeping rates steady would give the Council more time to assess the impact of tariffs, global uncertainties and other risks, the document said.

“It was also argued that the current level of interest rates should be seen as sufficiently robust in managing shocks, in view of two-sided inflation risks and taking into account a broad range of possible scenarios,” it added.

The ECB continued to see a wait-and-see approach as having a ‘high option value,’ the document said.