With inflation subdued and growth steady, the ECB maintained rates at their lowest level in more than two years, matching market expectations.
The Frankfurt-based European Central Bank held its deposit facility rate at 2% on Thursday for the third consecutive meeting.
The bank’s deposit rate remained unchanged for the third meeting in a row.
Keeping rates in a steady holding pattern for a third meeting suggests the ECB believes inflation is largely under control after having fallen from double-digit highs triggered by post-pandemic supply shocks and the energy crisis following Russia’s invasion of Ukraine.
“The economy has continued to grow despite the challenging global environment,” said ECB President Christine Lagarde at her post-meeting news conference.
The rate decision comes as European economies post solid results and hold up relatively well against global trade tensions.
Eurozone gross domestic product rose 0.2% in the third quarter of 2025, compared with the previous three months, and it edged up by 1.3% year-on-year, according to preliminary estimates from Eurostat released just hours before the ECB's decision.
Recent surveys of European business activity have shown a modest upswing at the start of the fourth quarter despite the imposition of a 15% tariff, or import tax, on European goods by US President Donald Trump.
Meanwhile, inflation is hovering near the ECB's 2% target. According to Lagarde, the ECB sees "the inflation outlook broadly unchanged", despite a slight uptick recently.
Consumer prices rose by 2.2% year-on-year in September, up from 2% in August. Core inflation, which excludes volatile items such as food and energy, rose to 2.4% in September from 2.3% in August.
With inflation under control, the central bank for the 20 countries that use the euro is not likely to change rates again until sometime next year. Lagarde said that the ECB is "not precommitting to any particular rate path" and will follow a data-dependent approach as, meeting by meeting, they revisit forecasts.
How the ECB is setting the monetary policy
The central bank sets monetary policy for the eurozone through three main interest rates. Lower rates tend to support growth, while higher rates are used to fight inflation.
The deposit facility is the interest rate banks receive when they deposit money with the central bank overnight.
The interest rate on the main refinancing operations is the rate banks pay when they borrow money from the ECB for one week, while the marginal lending facility is the rate banks pay when they borrow from the ECB overnight.
Both the main refinancing operations and marginal lending facility rates remained unchanged at 2.15% and 2.40%, respectively, on Thursday.
Risks on the horizon
Christine Lagarde used a cautious tone when talking about inflation and the economy "being in a good place," and she added that the outlook was uncertain, "owing particularly to ongoing global trade disputes and geopolitical tensions.”
According to the ECB, the global environment is likely to remain a drag, and while services are growing, they expect further declines in manufacturing due to external demand weakness.
But consumer spending is expected to prop up the eurozone economy in the coming months.
Lagarde was urging eurozone countries to use fiscal and structural reforms to boost productivity in the upcoming months.
She singled out the progress made towards the US-China trade negotiations, and stressed that the ECB is closely monitoring their impact, including on rare earth prices, which are essential for the European economy and in particular for the automobile sector.
She also highlighted that the ongoing full-scale Russian invasion of Ukraine continues to be a major stressor for the eurozone economy. However, higher than expected defence spending could boost the economy, despite fueling inflation.
She added, “from a monetary policy point of view, we are in a good place," saying that the ECB "will do whatever is needed to make sure that we stay in a good place.”
The ECB's meeting follows the Fed’s decision to cut its key interest rate on Wednesday for the second time this year.
Central bank officials in the US seek to shore up economic growth and hiring, even as inflation stays elevated. The rate cut — a quarter of a point — brings the Fed's key rate down to about 3.9%, from about 4.1%.
Meanwhile, the Bank of Japan kept interest rates steady at 0.5% on Thursday, despite inflation being above its 2% target. The bank kept the door open to a December rate hike.