Data supports stable monetary policy outlook
Fresh economic figures from across the euro zone indicate that both growth and inflation remain on a stable trajectory. Analysts say this reinforces expectations that the European Central Bank will not move further on interest rate cuts in the coming months. Growth has held up despite global trade uncertainty, supported by a resilient labour market and inflation that has hovered near the 2% target throughout the year.
While national results differ sharply across the currency bloc, from Spain’s solid performance to Germany’s weak momentum, the overall picture remains one of moderate expansion and price stability. According to Oxford Economics, no new data suggests a deviation from the ECB’s near-term policy assumptions.
Inflation remains contained across major economies
Latest national inflation readings show divergent trends, but not enough to shift the aggregated view. France held steady at 0.8%, Germany accelerated to 2.6%, Spain eased to 3.1%, and Italy slipped to 1.1%. Once smaller economies are factored in, euro zone inflation remains unchanged at 2.1%. This reinforces expectations that the ECB’s December meeting will avoid any policy changes.
The ECB’s consumer expectations survey also shows stable views on future inflation and household spending. Financial markets now price almost no chance of a rate adjustment next month and assign only a one-in-three probability to another cut before mid-2026.
Germany struggles while the bloc stays resilient
Germany continues to face stagnant economic activity as high industrial costs and competition from China weigh on exports. Retail sales fell 0.3% in October, reflecting a cautious consumer backdrop. However, the labour market remains steady, preventing a broader downturn. Economists note that while momentum remains weak, conditions do not signal an imminent shock.
Other euro zone economies continue to show moderate expansion, cushioning the impact from Germany’s ongoing industrial challenges. Analysts say that the broader region remains on a path of slow but positive growth.
Debate over rate cuts moves into 2026
Although a December rate cut is seen as unlikely, the discussion could return next year. Falling energy prices may push inflation below target in 2026, raising concerns among some policymakers. Even so, the ECB traditionally looks beyond temporary energy-driven changes and focuses on medium-term pressures. The institution has also cautioned that price pressures excluding energy remain elevated.
For now, the ECB maintains a cautious stance on monetary policy. Some officials argue that the institution may already have finished its cutting cycle after reducing rates throughout the year. With inflation stable and growth steady, the bank appears content to wait for clearer signals before moving again.
