The ECB Governing Council held its monetary policy meeting in Florence on October 29-30, 2025, reviewing economic developments, financial markets, and policy options amid global uncertainties.
The European Central Bank’s Governing Council convened in Florence on Wednesday and Thursday, 29-30 October 2025, to review financial, economic, and monetary developments.
Market developments indicated resilience in euro area financial markets, with investor risk appetite near its highest since the global financial crisis, supported by positive macroeconomic outlooks in the euro area and the US.
Market expectations for euro area growth remained robust, with revised upward growth forecasts for 2025 and expectations of stable inflation expectations close to 2%. Equity markets and gold prices experienced rallies, driven by optimism around artificial intelligence (AI) investments and global reserve diversification, despite concerns about overvaluation.
Euro area financial conditions had eased, returning to levels observed three years prior, with stable sovereign debt markets and moderate changes in money markets. US and UK monetary policy discussions focused on a potential slowdown or phasing-out of quantitative tightening, with euro area liquidity remaining stable.
Euro area inflation remained close to the 2% target, with headline inflation rising to 2.2% in September mainly due to energy prices. Underlying inflation measures, including core inflation at 2.4%, showed signs of moderation, supported by slowing wage growth and rising productivity. Risks to inflation remained two-sided, influenced by global trade tensions, geopolitical risks, and climate-related factors.
The euro area economy grew by 0.2% in Q3, with PMI surveys indicating ongoing growth in services and challenges in manufacturing due to tariffs and currency strength. Labour market conditions remained resilient, with unemployment at 6.3%, but softening labour demand warranted close monitoring.
Fiscal policies were discussed, noting that the fiscal stance might be more expansionary due to increased defense spending under NATO commitments, while risks from trade disputes and geopolitical tensions persisted. The Governing Council emphasized the importance of structural reforms, investment, and financial market integration to bolster resilience.
Members agreed to keep the three key ECB interest rates unchanged, citing stable inflation outlooks and economic resilience, with a data-dependent approach for future policy decisions. The Council highlighted the importance of maintaining optionality and being agile to respond to risks or shocks.
The monetary policy statement finalized the decision to hold rates steady, with future meetings remaining flexible to adjust policy as new data and risks emerge. The next account of monetary policy is scheduled for 22 January 2025.
