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February 05, 2026EUROPEAN CENTRAL BANK MONETARY POLICY The European Central Bank (ECB) announced today that it would leave the three key ECB interest rates unchanged. The interest rates on the deposit facility, main refinancing operations and the marginal lending facility will remain at 2.0%, 2.15%, 2.4% respectively.
The European economy grew by 0.3% in the fourth quarter of 2025 driven by services, especially in the information and communication sector. Furthermore, manufacturing has been resilient in the face of geopolitical and global trade uncertainties. There has also been an increase in construction supported by public investment.
The unemployment rate was at 6.2% in December demand for labour has cooled further. Private consumption is expected to gain support from rising labour incomes and lower household savings rate. Government investment is strong in defence and infrastructure, and new surveys suggest that business investment is expected to strengthen further with firms investing in new digital technologies.
Inflation (HICP) declined to 1.7% in January due to a decline in energy prices. Energy price inflation was -4.1% in January and food price inflation increased to 2.7%. ECB states that indicators of underlying inflation remain consistent with their 2% medium-term target.
The asset purchase programme (APP) and Pandemic Emergency Purchase Programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests principal payments from maturing securities.
The Governing Council notes it is determined to see inflation stabilise at its 2.0% medium-term target. The Transmission Protection Instrument is also available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.
The next scheduled monetary policy meeting will be on March 18-19, 2026.
Source: European Central Bank:Monetary policy decisions (Press Release); Press Conference
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