European Central Bank Likely to Keep Interest Rates Unchanged This Week

• ECB likely to keep interest rates unchanged as inflation eases.
• Policy decisions will stay flexible, with Lagarde stressing a meeting-by-meeting approach.

The European Central Bank is expected to leave interest rates unchanged in a regular two-day policy meeting, which was announced on Thursday. This would be the fifth consecutive meeting where the ECB leaves the rates on hold. The key rates are expected to remain at 2.15% for the main refinancing operation, 2.40% for the marginal lending facility, and 2.00% for the deposit facility. Christine Lagarde, ECB president, will speak to the press after the decision has been taken to explain the reason behind it.

Reason Behind ECB’s Interest Rate Hold

ECB believes that its current policy is already doing great, and after the inflation surges, the central bank raised interest rates, which later started cutting rates once the inflation went down. ECB president Legarde has repeatedly said that the policy is in a good place, and during the December meeting, the ECB kept the rates unchanged and gave no signal on future moves.

The recent data show that the European economy is stable and improving. According to Eurostat, the European Union economy grew 0.3% in the final quarter of last year, and 2025’s economic growth has reached 1.6%. Inflation has also slowed to 1.7% in January, which is down from 1.9% in December. This shows that the inflation is cooling down slowly without affecting the economic growth.

While policy is stable, the ECB has made it clear that there is no set plan for future interest rate changes. Legarde has stressed a meeting-by-meeting approach where the decisions will depend on fresh economic data and the ECB will remain flexible.