The European Central Bank (ECB) decided at its meeting earlier today, Thursday, December 18, to maintain its three main interest rates unchanged. The deposit rate remains at 2%, the main refinancing rate at 2.15%, and the lending facility rate at 2.40%. This marks the fourth consecutive meeting where the ECB has kept its rates steady, following seven consecutive rate cuts.

The bank’s interest rate statement indicated that its experts’ forecasts project headline inflation to average 2.1% this year, 1.9% next year, and 1.8% in 2027. Core inflation, which excludes food and energy prices, is expected to reach 2.4% this year and 2.2% next year.

The ECB anticipates stronger economic growth than projected in September, driven primarily by domestic demand. Growth forecasts have been revised upward to 1.4% this year and 1.2% next year.

The Governing Council is committed to ensuring inflation remains at its 2% target over the medium term and will adopt a data-driven approach, making decisions at each meeting to determine the appropriate monetary policy.

The Appropriations Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP) are being phased out at a measured and expected pace, as the European Central Bank (ECB) has ceased reinvesting capital payments from maturing securities.

Markets are awaiting the ECB President’s comments and question-and-answer session with journalists at the press conference, which is expected to begin in approximately 45 minutes.