Monetary policy ECB again does not touch key interest rates
The European Central Bank is once again leaving key interest rates in the eurozone unchanged. The deposit rate, which is relevant for savers and banks, remains at 2.0 percent, as the central bank announced in Frankfurt on Thursday.
18.12.2025, 14:16
18.12.2025, 14:25
SDA
The eurozone is thus entering 2026 with comparatively low key interest rates, a year associated with economic hopes. With this step, the ECB is extending its interest rate pause in view of uncertain times and contained inflation.
The central bank had already left key interest rates untouched at its monetary policy meetings in July, September and October. There had previously been a series of cuts: As recently as spring 2024, the deposit rate that banks receive when they park money at the central bank was twice as high at 4.0 percent.
Lower key interest rates tend to be good for the economy: loans become more affordable, companies and private individuals can obtain financing for purchases or investments more cheaply and can thus ensure economic growth. However, savers receive less interest on overnight and fixed-term deposits, as banks pass on lower deposit interest rates for parked money to their customers.
Are interest rates more likely to rise again?
ECB President Christine Lagarde has recently repeatedly emphasized that the central bank is "well positioned" with the current interest rate level to navigate through the uncertainty. This is seen as an indication that key interest rates in the eurozone will remain stable for the time being.
Many economists also believe that interest rate cuts have bottomed out in the eurozone, which will welcome Bulgaria as its 21st member on January 1, 2026. ECB Executive Board member Isabel Schnabel recently said that she expects key interest rates in the eurozone to remain at their current level "for some time to come". She is "quite in agreement" with the market view "that the next interest rate move will be an increase, even if not in the near future", Schnabel said in an interview.
Inflation close to the ECB target
The fact that inflation, which got out of hand after the start of the Russian attack on Ukraine, is back under control also suggests that the ECB will continue to wait and see. In November, the inflation rate in the eurozone was 2.1 percent. This is only just above the central bank's target value.
The ECB is aiming for an annual inflation rate of 2.0% for the eurozone in the medium term - far enough away from the zero mark. Permanently low prices are considered a risk for the economy: companies and consumers could postpone investments in the expectation that things will soon become even cheaper. Even if prices rise too sharply, this is poison for the economy. Consumers then lose purchasing power. This reduces consumption as an important pillar of the economy.
