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    Escriva shows stability in inflation projections and exchange rates, expecting no further decline in inflation.

    by VT Markets
    /
    Sep 22, 2025
    The European Central Bank (ECB) is keeping its inflation target at 2% and maintaining current interest rates. There’s no immediate worry about the exchange rate. Escriva has mentioned that there’s a pause in policy changes, meaning interest rates might adjust slightly if needed. However, small variations from the inflation target won’t require action.

    A Period of Stable Interest Rates

    The ECB’s decision to pause suggests we will have stable interest rates going forward. The bank is content with inflation close to its 2% goal and won’t react to minor data changes. This means short-term rates, like Euribor futures, will likely stay within a narrow, predictable range for the remainder of the year. Recent inflation data from August 2025 shows a manageable rate of 2.1% in the Eurozone. Coupled with steady GDP growth of 0.4% in Q2, this gives officials little reason to adjust rates. Markets have already reflected this, with diminished expectations for any rate changes. For traders dealing in derivatives, this indicates a focus on strategies that take advantage of low volatility. Selling options on instruments like the Euro Stoxx 50 looks promising, especially since the VSTOXX volatility index has dropped close to 14. The clear message from Frankfurt is to expect calmness, making it tougher for traders who depend on significant price movements.

    Pricing at the ECB Meetings Shows No Movement

    This stable environment is a big change from the volatility seen during the inflation spike of 2022-2023. Back then, markets anticipated aggressive rate hikes at each meeting. Now, the pricing for the rest of the 2025 ECB meetings indicates almost no expected movement. The ECB’s indifference toward the euro’s exchange rate, which remains steady around 1.0800 against the dollar, further simplifies the situation. This supports selling EUR/USD currency volatility using options like short strangles. Unless there’s a significant policy change from the US Federal Reserve, the euro will likely stay in a limited range. Create your live VT Markets account and start trading now.

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