The European Central Bank said Thursday it is keeping interest rates unchanged, citing signs of an improving economic outlook in the euro area.
It was the fourth straight meeting in which the ECB left rates on hold after cutting its benchmark deposit rate to 2 percent in June.
Inflation in the 20‑nation eurozone held at 2.1 percent in November, according to EU statistics. The ECB expects inflation to average 2.1 percent this year and stabilize around its 2 percent target in the medium term. Staff projections foresee inflation averaging 1.9 percent in 2026, 1.8 percent in 2027 and returning to 2 percent in 2028.
Prices surged sharply beginning in late 2021, peaking at a record 10.6 percent in October 2022. The ECB responded with one of its most aggressive tightening cycles, raising rates by 450 basis points between July 2022 and late 2023 before beginning to ease policy in 2024.
ECB President Christine Lagarde said the bank “reconfirmed that we are in a good place,” pointing to steady inflation and signs of economic resilience.
The eurozone economy grew 0.3 percent in the third quarter, supported by stronger consumption and investment. Exports also rose as European firms weathered U.S. tariff pressures better than expected. Unemployment remained near a historic low of 6.4 percent in October, and industrial production increased 0.8 percent that month.
The ECB raised its growth forecasts to 1.4 percent for 2025, 1.2 percent for 2026 and 1.4 percent for 2027.
Economists expect rates to remain unchanged for an extended period. Vanguard senior economist Shaan Raithatha said the ECB is likely to hold its stance through 2026, while ING’s Carsten Brzeski described the bank’s “good place” as a neutral policy setting that would shift only if inflation or growth weaken significantly.
Lagarde said the ECB is not pre‑committing to a rate path and will continue making decisions “meeting by meeting,” adding that being in a good place “does not mean that we are static.”
