The European Central Bank (ECB) has decided to keep its interest rate unchanged at 2% as the region’s inflation figures remain around the 2% medium-term target.
This inflation outlook is similar to that projected in June with headline inflation expected to remain at an average of 2.1% in 2025, 1.7% in 2026 and 1.9% in 2027. For inflation excluding energy and food, the ECB expects an average of 2.4% in 2025, 1.9% in 2026, and 1.8% in 2027.
The European economy is projected to grow by 1.2% in 2025, revised up from the 0.9% expected in June. The growth projection for 2026 is now slightly lower, at 1.0%, while the projection for 2027 is unchanged at 1.3%.
The ECB Governing Council is determined to ensure that inflation stabilises at its 2% target in the medium term. The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will remain unchanged at 2.00%, 2.15% and 2.40% respectively.
In the aftermath of the EXB announcing the held rates, the euro dipped a touch, while euro zone bond yields stayed steady, and European stocks held higher in Thursday’s trading.