ECB December Meeting: No Change Despite Uncertainties

At today’s meeting, the ECB Governing Council decided to keep its three interest rates unchanged at 2.00%, 2.15% and 2.40% for the interest rates on the deposit facility, the main refinancing operations and the margina l lending facility respectively. The decision – widely expected – was unanimous. The ECB also released its new economic projections until 2028. As we expected, GDP growth is revised up for 2025-2026 and 2027 (respectively now at 1.4%, 1.2% and 1.4% and stand at 1.4 % for 2028 ) . Inflation is still seen as in line with the price stability objective with 1.9 %, 1.8 % and 2.0 % in 2026, 2027 and 2028 respectively. In the monetary policy statement, the Governing Council stressed that it “ is determined to ensure that inflation stabilises at its 2% target in the medium term . ” As we also expected, the communication attached to the decision highlights that “ in any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation stabili s es at its 2% target in the medium term at our medium-term target and to preserve the smooth functioning of monetary . ” Against this background, and despite still prevailing uncertainties, a prolonged period of unchanged monetary policy stance seems now likely. In the absence of substantial adverse economic shocks, we now expect no policy rate change during the whole 2026 year.