ECB Kept Rates Unchanged

2025-12-18 · Market News · QuoteReporter

Summary

The European Central Bank (ECB) announced on December 18, 2025, that it will maintain its three key interest rates unchanged. This decision comes alongside the release of new Eurosystem staff projections, which suggest that inflation is expected to stabilize around the ECB’s target of 2% over the medium term.

Key Details

The ECB’s Governing Council has decided to keep the interest rates on the deposit facility, the main refinancing operations, and the marginal lending facility at 2.00%, 2.15%, and 2.40% respectively. The decision is based on updated economic projections indicating that headline inflation is likely to average 2.1% in 2025, decreasing slightly in subsequent years before stabilizing at around 2.0% by 2028. Core inflation, excluding energy and food prices, is projected slightly higher, reflecting a slower decline in services inflation than previously anticipated.

Economic Context

The ECB’s updated economic assessment shows an improvement in growth forecasts compared to earlier projections in September. Economic growth in the Eurozone is now expected to be 1.4% in 2025, with a slight dip to 1.2% in 2026, before returning to 1.4% in 2027 and maintaining that level in 2028. This growth is primarily driven by robust domestic demand. The ECB remains committed to ensuring that inflation stabilizes at its 2% target in the medium term, adopting a data-dependent approach to future monetary policy decisions.

Market Implications

The ECB’s decision to maintain interest rates, coupled with a stable inflation outlook, is likely to influence the EUR and European financial markets by providing a predictable monetary environment. The continuation of a measured pace in reducing the asset purchase program (APP) and the pandemic emergency purchase program (PEPP) portfolios, without reinvesting maturing securities, supports this stability. Additionally, the availability of the Transmission Protection Instrument serves as a safeguard against disorderly market dynamics, further ensuring effective monetary policy transmission across the Eurozone.

Next Steps

The ECB has emphasized that it is not pre-committing to any specific future rate paths but will continue to evaluate economic and financial data closely. The Governing Council will adopt a meeting-by-meeting approach to assess the need for any adjustments to the monetary policy stance. Future decisions will be guided by the dynamics of underlying inflation and the effectiveness of monetary policy transmission. The next assessments and potential policy adjustments will be informed by ongoing economic developments, with the ECB ready to adapt its instruments as necessary to achieve its price stability mandate.

Original ECB Announcement

Title: Monetary policy decisions
Date: Recent
Source: ECB.Europa.eu