The ECB has chosen to hold its key interest rates steady, adopting a more cautious and optimistic stance as inflation continues to approach its 2% target. The ECB made this decision after its governing council meeting on September 11, 2025. As explained, the ECB regarded its prevailing monetary policies as sufficiently restraining and tending to push inflation back down to target over a period of time.
Interest rates on the main refinancing operations are on hold at 4.5%, the marginal at 4.75%, and the deposit at 4%
The monetary rates have been on hold, after the mid-2024 monetary policy rate hike, in cumulative tightening measures about inflation and aggressive rate hikes, which empower inflation centrally.
Headline inflation in the Euro area has been showing signs of moderation. Most recently, a report was issued showing reduced price pressures in energy, food, and key core components in the inflation report. Although inflation sits still remains supportive, the ECB issued its claim that inflation is easing and projected to continue declining through the midterm period to 2%.
The European Central Bank (ECB) said that:
“Inflation continues to decline, largely due to lower energy prices and easing supply bottlenecks.”
“Underlying price pressures are also showing signs of softening, although wage growth remains robust.”
This is why, in light of the current situation, the ECB’s inflation control efforts explain their current policy stance and the assumption that the current interest rates are contributing to the disinflationary process.
Inflation and wage growth simultaneously are the reasons the ECB restricted its policy of raising interest rates, claiming the current figures are positive for the disinflation process.
Economic growth in the eurozone is still “subdued”
The centre has also said that tighter financing conditions are having a dampening effect on demand, particularly within the interest-sensitive “housing and business investment” sectors. Furthermore, high interest rates and the uncertainty that surrounds them have also inhibited consumer spending.
The ECB’s centre has also said that the eurozone growth macroeconomic projections remain relatively unchanged, and with downside risks. Outside the eurozone, geopolitical tensions and lags in global trade continue to drive slower economic growth within the eurozone.
Although there is speculation for rate cuts in 2026, ECB President Christine Lagarde stated it is still too early to talk about easing. Lagarde asserted:
“We are not thinking about rate cuts at this stage…Our focus remains on ensuring inflation returns sustainably to our target.”
Amid speculation about 2026 rate cuts, Lagarde quickly denied it by stating that they are not thinking about rate cuts at this stage, and at this point, they continue to work to get inflation sustainably back on target.
Policy transmission and financial conditions
The ECB also stated that monetary policy transmission is on course as expected. Credit rates in the eurozone have increased sharply, and credit growth has stagnated, showing that tighter policy has passed to the real economy.
No matter the circumstance, the central bank will always monitor possible disrupted states of financial order; in this case, it is the banking system and corporate debt, real estate debt, and reckless and unregulated housing price inflation.
While watching over the Eurozone economy, the ECB relies on its predicted information and estimates, giving continued emphasis on its predicted monetary policy on the imbalance of price, and on the predicted and opposite relationship of price and economic growth.
Currently, the ECB appears to be keeping its predicted stance on the price policy and the changing economic conditions. The eurozone economy is experiencing a complex configuration of weak growth and disinflation. In this delicate condition, the disinflation trend is changed with the risk of recession. In these conditions, the ECB is providing a predictable policy and making conditions less predictable.