Eurozone consumer inflation held steady in November 2025, with the consumer price index (CPI) increasing 2.1% year over year. This figure aligns with October’s reading but falls just short of the preliminary 2.2% estimate. The inflation rate remains marginally above the European Central Bank’s (ECB) 2% medium-term target. This data underlines expectations that the ECB will maintain its key interest rate at 2% during its policy meeting scheduled later this week, reflecting price stability amid solid economic conditions.

Stable Inflation Reinforces ECB’s Policy Hold

The November CPI increase of 2.1% year-over-year compares to the flash estimate of 2.2% and matches the previous month’s figure. On a monthly basis, consumer prices actually declined by 0.3%, following a 0.2% rise in October. Core inflation, which excludes volatile food and energy prices, remained at 2.4% compared to a year earlier. This persistent but contained inflation supports the ECB’s expectation to keep its benchmark rate steady at 2%, marking the fourth consecutive meeting without a change.

ECB President Christine Lagarde recently commented that the eurozone economy is in a “good place,” signaling confidence in the region’s growth prospects. This positive outlook suggests the ECB will likely revise upward its growth forecasts for 2025, reflecting stronger-than-expected economic momentum. Yet, Lagarde and the ECB remain cautious, emphasizing that inflation is close to target but warrants continued vigilance.

Market and Analyst Perspectives on ECB Policy

Market participants currently assign about a 30% probability to an ECB rate hike before the end of 2026, despite widespread expectations of no immediate change. This shift follows comments from ECB policymaker Isabel Schnabel, known for her hawkish stance, who indicated a future rate increase could be forthcoming, though not imminently.

Analysts at ABN Amro maintain their forecast that the ECB will hold policy steady. They noted that recent data, pointing to stronger economic activity, will prompt staff to raise 2025 growth projections. However, this revision is seen as backward-looking and unlikely to influence the ECB’s current policy path. ABN Amro highlighted that Lagarde will probably face questions about the market’s recent tilt toward pricing a rate hike rather than a cut during the upcoming press conference.

Inflation: Market Outlook

The Eurozone’s sustained 2.1% inflation rate in November confirms a period of near-target price stability, which is expected to keep the ECB’s interest rate on hold through 2026. Investors and policymakers will remain attentive to forthcoming economic data and ECB communications for clearer signals on inflation trajectory and monetary policy direction. The current outlook reflects a delicate balancing act as the ECB navigates moderate price pressures alongside encouraging growth figures.