ECB holds key rates steady at 2.25%–2.65%, cites energy-price uncertainty

The European Central Bank left its three key interest rates unchanged on Thursday, keeping its deposit facility at 2.25%, its main refinancing operations rate at 2.40% and its marginal lending facility at 2.65%. In a monetary policy statement dated July 23, the ECB said, “The Governing Council today decided to keep the three key ECB interest rates unchanged.”

The ECB, which sets monetary policy for the 20-country euro area and influences borrowing costs across the bloc, said uncertainty around energy prices remains a major reason for caution. “The outlook for energy prices is highly volatile,” it said, adding that the outlook is currently close to the baseline in the June 2026 Eurosystem staff projections, though still above levels seen before the conflict in the Middle East. The central bank also repeated that it is focused on returning inflation to its 2% medium-term target. “The Governing Council is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term,” the statement said. It added that policymakers “will follow a data-dependent and meeting-by-meeting approach” and are not pre-committing to a path for rates.

Thursday’s decision was the first by the Governing Council since June 11, when the ECB raised all three key rates by 25 basis points. Those increases took effect on June 17. The latest move therefore leaves policy steady one month after that increase, rather than marking a new shift in direction. For near-term inflation context, Eurostat’s flash estimate for June 2026 put annual euro-area inflation, measured by the Harmonised Index of Consumer Prices, at 2.8%.

The ECB did not publish new staff projections at this meeting and instead referred back to its June baseline. In those June 2026 projections, headline inflation was expected to average 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028. By pointing back to those figures, the central bank tied Thursday’s decision to the same baseline outlook it used at its last policy meeting, while emphasizing that energy prices remain an important source of uncertainty.

In its statement, the ECB said the three rates “will remain unchanged at 2.25%, 2.40% and 2.65% respectively.” President Christine Lagarde is scheduled to discuss the decision at a press conference starting at 14:45 CET on Thursday, when she is expected to provide more detail on the Governing Council’s assessment.