Governing Council flags resilient euro area economy but warns global trade uncertainty and geopolitical tensions continue to cloud outlook
The European Central Bank on Thursday kept its three key interest rates unchanged, reaffirming confidence that inflation in the euro area will stabilise at its 2 per cent target over the medium term, even as global uncertainties persist.
“The economy remains resilient in a challenging global environment,” the central bank said. “Low unemployment, solid private sector balance sheets, the gradual rollout of public spending on defence and infrastructure and the supportive effects of the past interest rate cuts are underpinning growth,” the release noted.
In its latest policy statement, the ECB said the deposit facility rate will remain at 2.00 per cent, the main refinancing operations rate at 2.15 per cent, and the marginal lending facility rate at 2.40 per cent. The decision was taken by the Governing Council, which highlighted the resilience of the euro area economy despite a challenging global environment.
The central bank pointed to low unemployment, strong private sector balance sheets, and the gradual rollout of public spending on defence and infrastructure as key factors supporting growth. It also noted that the supportive effects of past interest rate cuts are continuing to feed through the economy.
However, the ECB cautioned that the outlook remains uncertain, driven mainly by global trade policy uncertainty and ongoing geopolitical tensions, which could influence inflation dynamics and growth prospects.
The Governing Council is determined to ensure that inflation stabilises at its 2 per cent target in the medium term,” the statement said. It added that policy decisions will continue to be guided by a “data-dependent and meeting-by-meeting approach.”
The Governing Council said it is determined to ensure that inflation stabilises sustainably at its 2 per cent target in the medium term.
The ECB also underlined that it is not pre-committing to a particular interest rate path, keeping all options open as it navigates an uncertain global backdrop.
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