ECB holds rates at 2% amid global uncertainty

[European Central Bank ECB Headquarters With Euro Symbol Logo]
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The European Central Bank (ECB) held interest rates steady at 2% on Thursday, marking a second consecutive pause after eight cuts since June 2024.

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.

After eight cuts in just over a year, policymakers are in wait-and-see mode, with inflation hovering around the 2% target. The steady stance reflected a balancing act between easing inflationary pressures and growing geopolitical and trade-related uncertainties.

Recent eurozone data also support the ECB’s wait-and-see approach. Headline inflation came in at 2.1% year-on-year in August, hovering near the central bank’s target, while core inflation remained steady. Meanwhile, economic indicators such as the composite PMI and unemployment figures have improved, signaling a modest but tangible recovery.

The new ECB staff projections present a picture of inflation similar to that projected in June. They see headline inflation averaging 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027.

The Governing Council is determined to ensure that inflation stabilizes at its 2% target in the medium term, and will follow a "data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance."

In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data.

The Governing Council is not pre-committing to a particular rate path, the ECB said [https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.mp250911~6afb7a9490.en.html].

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