The European Central Bank (ECB) kept interest rates steady at 2% for the fifth consecutive meeting. Inflation in the eurozone is at 1.7%, below the 2% target, with downside risks due to a stronger euro. The ECB expects stable rates for 2026, with the next meeting scheduled for March 19.

The ECB’s decision follows January’s lower-than-expected eurozone inflation figures. The stronger euro, reaching a high against the US dollar, could impact inflation and export competitiveness. The Bank of England also maintained its rates unchanged. ECB staff forecasts show inflation averaging 1.9% in 2026.

The ECB’s interest rates have remained unchanged since June 2025, with the deposit facility rate at 2.00%, main refinancing rate at 2.15%, and marginal lending facility at 2.40%. The strength of the euro may lead to inflation falling below the 2% target, potentially prompting another rate cut in March.

Investors may see equity markets rise with anticipated rate cuts, while bond prices increase due to lower yields. Savings account rates will decline, impacting savers, but borrowers benefit from cheaper consumer debt and mortgages. The ECB’s 2026 meeting schedule includes dates every few months, with the next meeting set for March 19.

Read more at Morningstar: ECB Holds Interest Rates Steady After Inflation Undershoots