ECB maintains interest rates and projects inflation stabilization in 2028

Christine Lagarde, President of the ECB, and Luis de Guindos, Vice-President, announced that the Governing Council has decided to keep the three key ECB interest rates unchanged.

The updated assessment confirms that inflation is expected to stabilize at the two percent target in the medium term. New Eurosystem staff projections estimate average inflation of 2.1% in 2025, 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028. Inflation excluding energy and food is projected at 2.4% in 2025, decreasing to around 2% by 2028.

Economic growth is forecasted at 1.4% in 2025, 1.2% in 2026, and 1.4% in 2027 and 2028, driven mainly by domestic demand. The economy has shown resilience, with a 0.3% growth in the third quarter, supported by consumption and investment. The labour market remains strong, with unemployment at 6.4% in October.

The ECB emphasizes the importance of strengthening the euro area through sustainable public finances, structural reforms, and completing the banking and savings union. Risks to inflation include global trade tensions, geopolitical uncertainties, and climate-related factors. The Governing Council remains data-dependent and ready to adjust monetary policy instruments as needed.

Market rates have increased since the last meeting, but euro area banks remain resilient with strong capital and liquidity ratios. The Governing Council will continue monitoring financial stability risks and is prepared to act to ensure inflation stabilizes at the target.

The full details of the decision are available in the official press release on the ECB website.