The European Central Bank believes current interest rate levels are robust enough in "managing shocks", minutes of its September meeting showed today, fuelling expectations of no further cuts for now.
The ECB kept its key rate steady at 2% for a second meeting in a row last month, following several reductions, with inflation having settled around the central bank's 2%.
A summary of the meeting showed that policymakers "argued that the current level of interest rates should be seen as sufficiently robust in managing shocks".
"Overall, there continued to be a high option value to waiting for more information," according to the minutes.
At the meeting, ECB President Christine Lagarde had sounded more upbeat about the euro zone's prospects and the central bank upgraded its growth forecast for this year.
The minutes added to the sense of cautious optimism about the eurozone, with policymakers believing risks to growth were "now more balanced" - meaning no changes to rates were needed.
It noted however heightened uncertainty due to "volatile global trade policy" and "geopolitical developments" - Europe has been a key target for US President Donald Trump in his tariff blitz.
But the uncertain environment was an argument for keeping rates on hold, which would allow time to assess the impact of tariffs, according to the minutes.
ING bank economist Carsten Brzeski said the minutes showed the ECB governing council believes that keeping rates steady was "the most appropriate response to ongoing elevated uncertainty".
The central bank for the 20 countries that use the euro could be compelled to make further rate cuts due to factors like worsening political instability in France or a bigger than expected hit from US tariffs, he said.
But if none of these risks materialise, Breszki said he expects that "interest rates will remain on hold for the next two years".
