The European Central Bank kept interest rates on hold on Thursday, opting for continuity as inflation hovers near target and the economy shows modest momentum.
The Governing Council left the deposit facility at 2.00%, the main refinancing rate at 2.15% and the marginal lending rate at 2.40%, matching market expectations and signaling a patient stance while price pressures continue to cool and growth stabilizes.
The rates decision was set out in the bank’s policy statement, which reiterated that future moves will hinge on incoming data and the medium term inflation outlook.
The choice to pause follows a series of reductions earlier in the year that brought the policy rate corridor down from its post pandemic peaks.
Inflation in the euro area ticked up to 2.2% year over year in September, according to the flash estimate, with services still the stickiest component.
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Food inflation eased to 3.0% while energy deflation faded. Underlying gauges were broadly steady, with core measures in a 2.3% to 2.4% range by Eurostat’s definitions.
The latest mix suggests that the disinflation trend has largely run its course for now even as the last mile back to a durable 2% remains in view.
A preliminary estimate shows euro area real GDP rose 0.2% quarter over quarter in the third quarter, a touch better than the second quarter, with the broader European Union up 0.3%.
The expansion continues to lean on services as manufacturing stabilizes unevenly. The data keep the region on a soft growth path but argue against recession risk intensifying in the near term.
The euro area unemployment rate held at 6.3% in September, unchanged from August and from a year earlier that stability has supported household incomes through the inflation surge while also complicating the last stretch of disinflation as service wages and shelter related costs adjust slowly.
The ECB has chosen to sit tight while the economy does the work, betting that restraint applied earlier continues to filter through without choking a fragile recovery.
