Fidelity International: ECB will keep interest rates unchanged for the time being
Salman Ahmed, Global Head of Macro and Strategic Asset Allocation at Fidelity International, shares his views on today’s ECB meeting:
"The ECB left interest rates and forward guidance unchanged as expected, with little shift from its narrative that things are currently in a good place from its perspective. The ECB is now pushing a message of growth resilience in the euro area as forecasts were revised upwards and risks are seen as broadly balanced, with inflation forecasts close to target, but undershooting slightly in 2026 and 2027.
"While rates are likely to be held in the near-term, we see clear risks that undershooting inflation early next year may prove to be persistent, prompting action by the ECB due to factors such as a stronger euro, trade tensions, a dovish Fed and the effects of wage disinflation. Moreover, a tightening of financing conditions, such as through the increase in longer-run yields, may lead to the ECB considering if action is needed to keep the broader financing environment from becoming unduly restrictive."