BofA: European Central Bank Set to Hold Key Rates in December Meeting

09:26 AM EST, 12/15/2025 (MT Newswires) -- BofA Global Research expects the European Central Bank to leave its key interest rates unchanged at its monetary policy meeting set for Thursday, with ECB President Christine Lagarde anticipated to reaffirm previous comments that the central bank is in a "good place." "The December ECB meeting is likely to be less eventful than we anticipated a couple of months ago. We expect no change in policy rates and only fine-tuning of communication. The new forecasts should show slightly better near-term growth and a smaller inflation undershoot to target next year," analysts said in a Monday preview note. "But the elephant in the room will be an inflation forecast that shows a (small) undershoot to the target throughout the forecasting horizon, likely including 2028. We expect Lagarde to point out that the undershoot is small and that near-term inflation is now closer to target, particularly core (at target now in 2026)." Looking forward, the research firm still projects that the ECB will lower its benchmark rates by 25 basis points at its March 2026 policy meeting amid expectations that the central bank is targeting "close to but below 2% inflation." The ECB is also not expected to raise rates through 2027.