【Decision to Hold Policy Rates】 The European Central Bank (ECB) decided on September 11, 2025, at its policy council meeting in Frankfurt, Germany, to hold all three key policy rates unchanged for the second consecutive meeting. The deposit rate remains at 2.0%, the policy rate (main refinancing operations rate) at 2.15%, and the marginal lending facility rate at 2.4%. After seven consecutive rate cuts through June, the ECB shifted to a holding pattern starting in July.
【Inflation and Economic Outlook】 ECB economists forecast inflation rates of 2.1% for 2025, 1.7% for 2026, and 1.9% for 2027, tracking around the medium-term target of 2%. Core inflation excluding energy and food is projected at 2.4% for 2025, 1.9% for 2026, and 1.8% for 2027. Economic growth is expected at 1.2% for 2025 (revised up 0.3 points from June forecast), 1.0% for 2026, and 1.3% for 2027.
【President Lagarde's Assessment】 President Lagarde stated at the press conference that "uncertainty has decreased due to tariff agreements with the US, making economic growth risks more balanced," evaluating current economic conditions as "favorable." However, she noted that uncertainties remain "higher than usual" due to trade policy opacity and pointed out the possibility that tariff increases could prompt countries with excess capacity to expand exports to the eurozone, potentially leading to below-forecast inflation.
【Future Policy Stance】 The ECB will continue to take appropriate policy responses based on economic and financial data and inflation outlook at each meeting. The next monetary policy council meeting is scheduled for October 29-30.