The European Central Bank (ECB) left borrowing costs unchanged for a second straight meeting on Thursday, saying inflation is contained and the euro zone economy remains resilient even as higher US tariffs weigh on global trade.
The ECB said the economy continues to show resilience.
The deposit rate was held at 2%, in line with consensus expectations.
Policymakers gave no guidance on the next steps, repeating that decisions will be made one meeting at a time and depend on incoming data.
ECB President Christine Lagarde will address a press conference starting at 2:45 pm in Frankfurt.
Inflation seen near target
“Inflation is currently at around the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged,” the ECB said in a statement.
Updated quarterly projections showed consumer prices rising 1.7% in 2026, compared with a previous forecast of 1.6%.
Inflation in 2027 is now expected at 1.9%, lower than earlier envisaged.
Growth in the 20-nation euro area is projected at 1.2% this year and 1% in 2026.
ECB, in a statement, added:
The 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%.
Inflation has edged just above the ECB’s 2% goal but remains under control, policymakers said, with most officials viewing current rates as appropriate to absorb the impact of US trade levies, geopolitical tensions, and renewed political uncertainty in France.
Rates plateau after a series of cuts
The ECB lowered borrowing costs eight times in the past year before pausing in July, reducing them from a peak of 4% to levels now seen as neither restrictive nor stimulative.
Analysts and investors no longer expect further cuts this year.
The euro slipped after Thursday’s announcement, falling 0.3% to $1.1664 as markets focused on forecasts for slower inflation in 2027.
German 10-year bond yields reversed earlier gains to trade one basis point lower at 2.64%.
US Fed expected to cut rates next week
The decision comes as the US Federal Reserve prepares to cut interest rates next week for the first time since December, after signs of weakness in the American labour market.
Data released Thursday showed US consumer prices rose 2.9% in August, up from 2.7% the previous month.
By contrast, euro area inflation is expected to remain close to target in the medium term.
While most ECB officials see price stability as restored after the surge that followed Russia’s invasion of Ukraine, views diverge on the outlook.
Lithuanian central bank Governor Gediminas Simkus has voiced concerns about inflation undershooting the target, citing a firmer euro among possible drivers.
Executive Board member Isabel Schnabel has warned of upside risks, pointing to trade friction and rising European defense spending.
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