FRANKFURT - The European Central Bank is expected to hold interest rates steady for its fourth meeting in a row as inflation remains in check, although debate is heating up about the path forward.
Following a year-long series of cuts, the central bank for the 20 countries that use the euro has kept its key deposit rate on hold at two percent since July.
Inflation has settled around the central bank's two-percent target in recent months and Europe has weathered US President Donald Trump's tariff onslaught better than initially feared, leaving little pressure for rates to move imminently.
"There won't be a big surprise under the ECB Christmas tree," Berenberg bank economist Felix Schmidt told AFP. "Inflation is under control, growth is okay."
With the hold likely a done deal, investors will be paying close attention to ECB President Christine Lagarde's press conference from 1345 GMT for any hints on the path forward after Governing Council members gave conflicting signals.
Isabel Schnabel -- widely considered a hawk who is particularly wary of inflation -- fuelled expectations of possible rate-rises down the line after telling Bloomberg she was "rather comfortable" to see traders pencil in hikes.
But others, including Finland's Olli Rehn and France's Francois Villeroy de Galhau, have emphasised just how uncertain the inflation outlook is.
"The name of the game for our future meetings remains full optionality," Villeroy said at a Bank of France speech earlier this month. "We don't exclude any policy action."
Lagarde herself told the European Parliament in December that she saw "two-sided" risks when it came to inflation, adding that uncertainty "was higher than usual owing to volatile global trade policies".