The European Central Bank (ECB) has left interest rates unchanged, saying inflation is expected to stabilise at its 2% target over the medium term.
The ECB’s Governing Council kept the deposit facility rate at 2.00%, the main refinancing operations rate at 2.15% and the marginal lending facility rate at 2.40%, the ECB announced on Thursday.
It said the economy was “resilient in a challenging global environment”, with low unemployment, solid private sector balance sheets, gradual public spending on defence and infrastructure, and the continuing effects of past rate cuts supporting growth.
The outlook remained uncertain, particularly because of global trade policy uncertainty and geopolitical tensions.
How the ECB says it will decide on future moves
The ECB Governing Council said it would take a “data-dependent and meeting-by-meeting” approach, basing future decisions on its assessment of the inflation outlook and related risks, as well as measures of underlying inflation and how effectively interest rate changes feed through to the economy.
It stated it was “not pre-committing” to any particular path for interest rates.
The ECB’s balance sheet continues to shrink as its bond holdings under the Asset Purchase Programme and the Pandemic Emergency Purchase Programme decline, with maturing securities no longer being replaced.
It added that it stood ready to adjust its tools within its mandate to keep inflation in line with its target, and said its Transmission Protection Instrument remains available to address “unwarranted, disorderly” market moves that could hinder how monetary policy works across the euro area.
