The European Central Bank left interest rates unchanged on Thursday for the third consecutive meeting, keeping its key deposit rate at 2% even as inflation across the eurozone accelerated to 2.2% in September.
The governing council said its view of inflation was "broadly unchanged", with president Christine Lagarde describing the decision to hold as unanimous. She noted that the balance of risks had shifted but remained balanced, leaving the central bank "in a good place". Signs of progress on trade and geopolitical fronts had mitigated some downside risks, she added.
Fresh data from the European Commission showed the eurozone economy expanded by 0.2% in the third quarter, ahead of analyst expectations of 0.1%, driven by strong performances in Spain and France, which grew by 0.6% and 0.5% respectively.
Inflation continues to diverge sharply across the bloc, with Cyprus reporting zero price growth, France at 1.1%, and Italy and Greece at 1.8%, while Romania recorded 8.6%, Estonia 5.3% and Slovakia 4.6%. The ECB remains concerned about price pressures from services, food and energy.
Analysts broadly expect rates to stay on hold. Mark Wall of Deutsche Bank said: "Where's the smoking gun for a rate cut? Despite all the various sources of uncertainty, the European economy continues to eke out some growth." The Bank of England is likely to keep its rate at 4% next month, while the US Federal Reserve cut its benchmark rate by a quarter point to a range of 3.75% to 4% this week.
