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ABN Amro Says ECB to Stay on Hold in "Foreseeable" Future Amid Eurozone Economic Strengthening

BY MT Newswires | ECONOMIC | 02/25/26 12:07 PM EST

12:07 PM EST, 02/25/2026 (MT Newswires) -- The strengthening eurozone economy adds to ABN Amro's conviction that the European Central Bank will keep policy on hold for the "foreseeable" future, despite the current inflation undershoot and euro (EUR) strength.

The current inflation undershoot is expected to be short-lived, while the euro strength is largely driven by the US dollar (USD), wrote the bank in a note.

Eurozone gross domestic product surprised to the upside in Q4 at 0.3% quarter over quarter, above the consensus forecasts of 0.2%.

Beyond near term rates, important news for medium term ECB policy is that Governing Council President Christine Lagarde looks likely to step down ahead of the end of her term in October 2027, according to reports from the FT.

The two main frontrunners appear to be former Spanish central bank governor and current head of the Bank of International Settlements,Pablo Hernandez de Cos, alongside former Dutch central bank governor Klaas Knot.

Whether Lagarde leaves early or not, the ECB is set to see significant changes in the makeup of the Governing Council over the coming one to two years, with Vice Chair de Guindos and French central bank Governor Francois Villeroy de Galhau stepping down on May 31, while Chief Economist Philip Lane and Isabelle Schnabel set to leave next year, in May and December respectively.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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