The ECB is expected to keep interest rates unchanged this week due to stable inflation and political uncertainty. Markets suggest a cut in December, but many economists doubt further easing. Eurozone inflation hit 2.1% in August, meeting the ECB’s target. Political turmoil in France adds risk to the economy, but ECB intervention is unlikely.

After eight rate cuts in over a year, the ECB’s key interest rates are: Deposit facility rate 2.00%, Main refinancing rate 2.15%, Marginal lending facility 2.40%. Some observers believe the rate-cutting cycle may end soon, while others expect one more cut in December. Inflation and growth forecasts remain stable for now.

Political turmoil in France poses a risk to the eurozone economy ahead of the ECB meeting. French prime minister’s deficit-reduction strategy raises concerns, contributing to a bond market selloff. ECB president Christine Lagarde may address the issue, but intervention is unlikely. Market repricing reflects fundamentals rather than contagion.

In its June projections, the ECB forecasted inflation to average 2.0% in 2025, 1.6% in 2026, and 2.0% in 2027. GDP growth predictions were 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The ECB is closely monitoring inflation levels and growth rates to determine future policy decisions.

Read more at Morningstar: What to Expect On Sept. 11