The European Central Bank (ECB) announced today that it will keep its three key interest rates unchanged, maintaining the deposit facility rate at 2.00%, the main refinancing operations rate at 2.15%, and the marginal lending facility rate at 2.40%.

In a statement, the ECB Governing Council said inflation remains close to its 2% medium-term target, and the overall inflation outlook is broadly unchanged. The Council highlighted that the eurozone economy continues to grow despite ongoing global trade tensions and geopolitical risks, supported by a robust labor market, strong private sector balance sheets, and the effects of past ECB interest rate cuts.

“The outlook remains uncertain, owing particularly to ongoing global trade disputes and geopolitical tensions,” the ECB said.

The Governing Council emphasized its commitment to stabilizing inflation at 2% in the medium term, and confirmed it will continue to follow a data-dependent, meeting-by-meeting approach when determining the monetary policy stance.

The ECB confirmed that its Asset Purchase Programme (APP) and Pandemic Emergency Purchase Programme (PEPP) are declining at a measured pace, as the Eurosystem no longer reinvests principal payments from maturing securities.

The ECB reiterated that it remains ready to adjust all policy instruments to ensure inflation stability and preserve the smooth functioning of monetary policy transmission. The Transmission Protection Instrument (TPI) is also available to counter disorderly market dynamics that may threaten effective transmission of monetary policy across eurozone countries.

The ECB President is scheduled to provide further details and explain the considerations behind today’s decision at a press conference at 14:45 CET.

The decision to hold interest rates steady reflects the ECB’s cautious approach amid global uncertainties, while signaling that the bank is prepared to act if inflationary pressures or financial market disruptions require intervention. (ILKHA)