The European Central Bank is expected to stand still next week, with the market closely watching economic forecasts and signals for the timing of rate hikes.

According to a Financial Times analysis, as European Central Bank (ECB) President Lagarde believes the bank is in "good shape," investors unanimously expect the ECB to maintain the benchmark interest rate at 2% next week and instead focus on its economic forecasts. Lagarde stated this week that rate setters may once again raise growth forecasts for the eurozone at the meeting. These stronger growth forecasts and ongoing inflation have recently led traders to increase bets on the ECB raising rates next year. However, due to ongoing controversy over the potential shift in monetary policy direction, and with pricing in the forward market reflecting this change only in recent weeks, traders will pay particularly close attention to clues about the timing of rate hikes, with any adjustments to policy signals expected to be subtle. George Morlan, Eurozone Economist at Royal Bank of Canada Capital Markets, said he does not expect the ECB to raise rates in 2026, as the "cyclical tailwinds may be temporary." He added that the ECB has "clearly stated that it does not want to overreact to temporary deviations from targets."