The European Central Bank (ECB) has left interest rates on hold at 2%, as widely expected, after inflation in the eurozone came in at 1.7% in the year to January.
The rate on its main refinancing operations (where banks borrow from the ECB for a week) remains at 2.15%, while the marginal lending facility, which provides overnight credit, was paused at 2.4%.
This means rates across the eurozone have been paused for a fifth consecutive time, since June last year, since inflation slipped back to the bloc’s target.
Lindsay James, investment strategist at Quilter, said: “With interest rates already far lower than its peers, inflation closely aligned with target and economic growth relatively steady, the ECB’s policymakers can afford to remain patient. For now, and likely for the remainder of the year, the ECB is in a comfortable ‘wait‑and‑see’ position.”
Economists still expect no change in the coming months from the ECB, which has predicted that inflation will average 1.9% in 2026 after hovering at 2.1% last year.
However, Andrzej Szczepaniak, an analyst at Nomura, said he expects its next move to be an increase rather than a cut, although he expects rates to “remain on hold for the foreseeable future”.
He forecasts unemployment in the eurozone to fall further, “adding to wage growth and inflationary pressures”. He predicted at least two quarter point increases in rates in 2028 to “bring inflation back to target”.
Read more: Eurozone inflation cools to 1.7%
ECB president Christine Lagarde addressed reporters at bank’s press conference at 1:45pm UK time. She said: “Our updated assessment reconfirms that inflation should stabilise at our two per cent target in the medium term. The economy remains resilient in a challenging global environment. Low unemployment, solid private sector balance sheets, the gradual rollout of public spending on defence and infrastructure and the supportive effects of our past interest rate cuts are underpinning growth. At the same time, the outlook is still uncertain, owing particularly to ongoing global trade policy uncertainty and geopolitical tensions.
“We are determined to ensure that inflation stabilises at our two per cent target in the medium term. We will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, our interest rate decisions will be based on our assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. We are not pre-committing to a particular rate path.”