The European Central Bank has kept its three key interest rates unchanged, signalling confidence that inflation is set to stabilise at the 2 per cent medium-term target.

The Governing Council confirmed that the deposit facility rate remains at 2 per cent, the main refinancing operations rate at 2.15 per cent, and the marginal lending facility at 2.40 per cent.

In its statement, the ECB noted that the euro area economy remains resilient. Continued low unemployment, healthy private sector balance sheets, and the gradual rollout of public investment in defence and infrastructure are supporting growth, alongside the lingering effects of previous rate cuts.

At the same time, the central bank acknowledged that the economic outlook remains uncertain, driven largely by global trade policy shifts and geopolitical tensions.

The ECB emphasised that its future monetary policy decisions will remain data-dependent and assessed on a meeting-by-meeting basis. Decisions will be informed by developments in the inflation outlook, underlying price pressures, financial data, and how effectively monetary policy is transmitted through the economy.

The bank also made clear that it is not committing to any specific path for future rates.

Meanwhile, the ECB’s balance sheet continues to reduce in size as holdings under both the Asset Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP) decline without reinvestment of maturing securities.

Main image: ECB President Christine Lagarde