• European Central Bank Holds Interest Rates Steady, Updates Inflation and Growth Projections
FRANKFURT, Germany – The European Central Bank’s Governing Council announced on December 18 that it will keep its three key interest rates unchanged.
The decision follows an updated assessment reconfirming that inflation is expected to stabilize at the bank’s 2% target in the medium term.
What is new?
The Governing Council’s latest monetary policy decision is to maintain current interest rate levels. The new Eurosystem staff projections forecast headline inflation to average 2.1% in 2025, 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028. Inflation excluding energy and food is projected to average 2.4% in 2025, 2.2% in 2026, 1.9% in 2027, and 2.0% in 2028.
The inflation forecast for 2026 was revised upward, which staff attributed to a slower anticipated decline in services inflation. Economic growth projections have been revised up from the September forecasts, driven by domestic demand.
Growth is now expected to be 1.4% in 2025, 1.2% in 2026, and 1.4% in both 2027 and 2028. The Council affirmed its commitment to a data-dependent, meeting-by-meeting approach to setting monetary policy and is not pre-committing to a particular rate path.
About
The European Central Bank (ECB) is the central bank for the eurozone. It is responsible for monetary policy, banking supervision, and financial stability in the European Union.
Related Topics
Germany’s gross domestic product (GDP) decreased by 0.3% in 2023