ECB holds rates steady amid global uncertainty
For the third consecutive time, the European Central Bank (ECB) has decided to leave its key interest rates unchanged. The decision, announced on Thursday following a policy meeting held exceptionally in Florence, Italy, instead of Frankfurt, Germany, came as no surprise to analysts.
The last interest rate cut, a reduction of a quarter of a percentage point, took place in early June. Since then, the benchmark deposit rate, at which banks can deposit funds with the ECB, has stood at 2 per cent. The refinancing rate, which banks pay when borrowing money from the ECB for a week, is 2.15 per cent, while the rate for overnight loans (the marginal lending facility) remains at 2.4 per cent.
Explaining its cautious stance, the ECB Governing Council noted that inflation is expected to remain close to 2 per cent, the institution’s medium-term target. It added that the assessment of the inflation outlook remains "largely unchanged," and that the eurozone economy has continued to grow "despite challenging global conditions."
The ECB nonetheless warned that the outlook remains uncertain, citing ongoing trade conflicts fuelled by US president Donald Trump and rising geopolitical tensions.
Since June 2024, the ECB has lowered interest rates a total of eight times. Having raised them sharply between July 2022 and mid-2024 to curb soaring inflation, the central bank is now keeping its options open regarding any future adjustments.
© PHOTO KIRILL KUDRYAVTSEV / AFP
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