ECB officials broadly agreed the current policy stance remains consistent with the 2% medium-term inflation target, the accounts of the ECB’s September policy meeting showed. While several members viewed inflation risks as tilted to the downside and a few saw them as tilted to the upside, policymakers agreed that the current level of interest rates is sufficiently robust to address potential shocks amid two-sided inflation risks. Meanwhile, participants noted that the euro area economy remains relatively strong, but growth is weak and faces several risks, with officials expressing concerns about rising geopolitical tensions and the potential effects of higher defense spending on fiscal policy. Between June 2024 and June 2025, the ECB cut borrowing costs by 200 bps, pausing in July after inflation reached its target. Investors now expect rates to stay unchanged in the near term, with the possibility of a return to tightening in late 2026.