European Central Bank Keeps Interest Rates Steady Despite Economic Uncertainties

The European Central Bank (ECB) has decided to maintain its key interest rates: the deposit facility rate at 2%, the main refinancing operations rate at 2.15%, and the marginal lending facility rate at 2.40%.

This cautious stance is a response to ongoing global economic uncertainties. ECB President Christine Lagarde emphasized the bank’s data-driven approach, stating that while inflation risks appear balanced, the ECB remains alert to potential upward pressures and is not committed to a specific rate trajectory.

The ECB has slightly upgraded its economic growth projections for the eurozone, now forecasting a growth of 0.9% in 2025, increased from 0.8%. Future growth is projected at 1.4% for 2026 and 1.5% for 2027, fueled by stronger-than-expected domestic demand, particularly in private consumption and investment.

Inflation forecasts have also been adjusted, with headline inflation expected to average 2.1% in 2025, 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028. Core inflation, which excludes energy and food, is set to be 2.4% in 2025 and gradually decline to 2.0% by 2028.

Despite these positive revisions, Lagarde urged caution, highlighting that global uncertainties, such as trade tensions and geopolitical conflicts, pose risks to the eurozone’s economy. The ECB’s monetary policy will remain flexible, allowing for adjustments based on incoming data and evolving economic conditions.

Overall, the decision to maintain interest rates reflects a balanced assessment of the eurozone’s economic outlook, with the ECB prepared to adapt its policies to promote price stability and support growth.