The European Central Bank (ECB) has maintained its current interest rates, extending a pause in rate hikes. Following a Council meeting in Frankfurt on Thursday, the ECB announced that its key interest rate will remain at 2.0 percent.
The rate for the deposit facility will also remain unchanged at 2.00 percent, along with the rates for the main refinancing operations and the marginal lending facility, standing at 2.15 percent and 2.40 percent respectively.
The decision was based on the assessment that inflation is currently near the medium-term target of 2 percent, with the Council’s outlook on inflation largely unchanged. New Eurosystem projections anticipate average overall inflation of 2.1 percent in 2025, 1.7 percent in 2026 and 1.9 percent in 2027. Excluding energy and food, inflation is projected to average 2.4 percent for 2025, 1.9 percent for 2026 and 1.8 percent for 2027.
Furthermore, the ECB revised its economic growth forecasts upward, projecting a 1.2 percent expansion in 2025, compared to the 0.9 percent expected in the June projections. Growth projections for 2026 are now slightly lower at 1.0 percent, while the forecast for 2027 remains unchanged at 1.3 percent.
The ECB Council emphasized its commitment to ensuring inflation stabilizes at its 2 percent target in the medium term. Monetary policy decisions will depend on incoming data and will be assessed on a meeting-by-meeting basis. The Council stated it would base its interest rate decisions on its assessment of inflation outlooks and associated risks, considering current economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission, adding that it would not pre-commit to a specific rate path.