CORRECTS-MNI ECB WATCH: ECB To Hold Again

(Removes incorrect reference to Bank Lending Survey publication data)

The European Central Bank is set to hold its deposit rate at 2% for a third consecutive meeting on Thursday, continuing in wait and see mode with only limited new sets of data available ahead of the gathering.

ECB President Christine Lagarde is likely to reiterate that the central bank is in a “good place” at the meeting in Florence, signalling no urgency for moving interest rates in either direction with very balanced risks. While officials have told MNI that there is still more likelihood that the next move on rates will be down, the ECB will not provide a new set of projections until December, when it publishes its first estimate for inflation in 2028, which could prompt policymakers to adjust their calculations of the risk of any inflation undershoot below the 2% target. (See MNI SOURCES: ECB In 'Wait And See' Mode, Risks Still Tilt Down)

US TARIFFS

Earlier on Thursday, third-quarter eurozone GDP figures should provide insight into how U.S. tariffs are impacting the euro area economy after the trade deal announced in July, but October’s flash inflation is not announced until Friday. Other risks include concerns over slower-than-expected increases in fiscal spending, and potential spillovers from U.S.-China trade negotiations.

New sanctions on Russia and any EU moves to water down its green transition, potentially diluting or delaying the impact of its ETS2 emissions trade system, are also factors. (See MNI SOURCES: Doubts Over EU Carbon Pricing Key For ECB Rates)

France’s fiscal outlook, a focus of market attention earlier in the month, has become less of an immediate concern since the reappointment of Sebastien Lecornu as prime minister, though the country’s problems could return to the spotlight as budget talks prove turbulent. (See MNI INTERVIEW: ECB's Wunsch Sees Less Chance Of Another Cut)