Key ECB interest rates remain unchanged as inflation stabilises
The European Central Bank's Governing Council today decided to keep its three key interest rates unchanged. The decision reflects an updated assessment that inflation should stabilise at the two percent target in the medium term, despite an uncertain outlook.
Inflation outlook reconfirmed at two percent
The Governing Council today decided to keep the three key ECB interest rates unchanged.
ECB President Lagarde stated, "Inflation should stabilise at our two per cent target in the medium term.
" The euro area economy demonstrated resilience in the fourth quarter of 2025, growing by 0.3 percent, primarily driven by services.
Low unemployment, solid private sector balance sheets, and public spending are underpinning growth.
However, the outlook remains uncertain due to global trade policy uncertainty and geopolitical tensions.
The ECB reiterated its data-dependent, meeting-by-meeting approach, without pre-committing to a particular rate path.
Resilient growth, persistent services inflation
Economic activity expanded by 0.3 percent in Q4 2025, led by services, with manufacturing showing resilience and construction picking up.
The labor market remains supportive, with unemployment at 6.2 percent in December.
Inflation declined to 1.7 percent in January, driven by a sharp fall in energy prices (-4.1 percent).
Food inflation increased to 2.7 percent, while core inflation eased to 2.2 percent.
Services inflation remained elevated at 3.2 percent.
Underlying inflation indicators are consistent with the two percent medium-term target, with signs of moderating wage growth.
Steady course, familiar challenges
This statement reinforces the ECB's cautious stance, offering little new guidance beyond a commitment to data dependency.
While acknowledging economic resilience, the persistent focus on geopolitical and trade uncertainties highlights ongoing vulnerabilities.
The call for completing banking and capital markets union underscores a structural reform agenda that remains largely unfulfilled.