Core Viewpoint - The European Central Bank (ECB) has decided to maintain its interest rates, indicating a consensus on the current policy stance and signaling a pause in the rate-cutting cycle as inflation approaches target levels [3][5]. Interest Rate Decision - The ECB kept the deposit facility rate at 2%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%, aligning with market expectations [3]. - This marks the second consecutive meeting where rates have been held steady following a pause in rate cuts since July [3]. Inflation Outlook - ECB President Lagarde stated that the process of reducing inflation has concluded, with current inflation levels nearing the bank's target [5]. - The ECB's latest forecasts predict Eurozone inflation to average 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027, with core inflation (excluding food and energy) expected to be 2.4% in 2025, dropping to 1.9% in 2026 and 1.8% in 2027 [5]. Asset Purchase Programs - The ECB is gradually reducing its Asset Purchase Program (APP) and Pandemic Emergency Purchase Program (PEPP) portfolios at a stable and predictable pace [6]. - Lagarde noted that the sovereign bond market in the Eurozone is functioning orderly, and there was no discussion of the Transmission Protection Instrument (TPI) during the meeting [6]. Economic Growth Projections - The Eurozone's economic growth forecast for 2025 has been revised upward to 1.2%, from a previous estimate of 0.9%, reflecting improved business activity and consumer confidence [9]. - Growth expectations for 2026 have been slightly downgraded to 1.0%, while the 2027 forecast remains at 1.3% [9]. External Risks - Market participants believe the ECB has entered a period of policy observation, with a less than one-third chance of another rate cut this year [8]. - There are concerns regarding external risks, including potential impacts from U.S. monetary policy and geopolitical uncertainties, which could affect the Eurozone's economic recovery [8][9].