The European Central Bank (ECB) is maintaining the deposit rate at 2 percent. The central bank decided this at an interest rate meeting on Thursday, according to a press release from the ECB. This is the fifth interest rate meeting in a row that the ECB has maintained the interest rate. The background to the decision is that the bank expects inflation to stabilize at 2 percent.
- The economy remains robust in a challenging global environment. Low unemployment, solid balance sheets in the private sector, the gradual roll-out of public spending on defense and infrastructure and the supportive effects of previous interest rate cuts support growth.
- At the same time, the outlook remains uncertain, especially due to continued global trade policy uncertainty and geopolitical tensions, the ECB press release states.
Expected to be kept on hold
It was also the expectation among several economists that the interest rate would be kept unchanged.
- The ECB has been getting inflation under control for some time now, and inflation has since spring last year fluctuated between 1.7 percent and 2.2 percent - i.e. close to the target of 2 percent. And the central bank has repeatedly sent a signal that it is comfortable with where it stands. This has not changed, says Nykredit chief strategist Frederik Engholm in a written comment.
The same message comes from chief economist Tore Stramer from the Danish Business Association.
- This clearly shows that both inflation and growth have long developed stably within the ECB's target, according to a written comment.
Stramer expects the ECB to maintain the key interest rate at the same level in 2026 and 2027. Chief economist Allan Sørensen from the Confederation of Danish Industry (DI) shares this assessment.
- The ECB has hit a sweet spot, where inflation is now dancing closely around the target of 2 percent. While both growth and unemployment are low at the same time. Lower interest rates will cause inflation to rise again, while higher interest rates will take the pace out of the European economy, which continues to limp along. Therefore, the ECB will not change the interest rate for the time being, predicts Allan Sørensen in a written comment.
/ritzau/
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