The ECB is widely expected to leave borrowing costs unchanged for a fourth consecutive meeting in December 2025, with the main refinancing rate remaining at 2.15% and the deposit facility rate holding at 2.0%. ECB President Christine Lagarde has recently noted that monetary policy is in a “good place”. Recent data showed the Euro Area economy grew by 0.3% in Q3, significantly faster than the ECB had projected in its September forecasts, while inflation stood at 2.1% in November, slightly above the 2% target. Investors will also focus on the ECB’s outlook for 2026, particularly whether a rate hike could come into consideration, with market-implied odds of a hike by the end of 2026 hovering around 30%. The central bank will also release updated staff projections and is expected to revise its growth forecasts higher.
