Will European Central Bank Hold Interest Rates | Money News

The European Central Bank (ECB) is holding its two-day assembly and can announce its financial coverage determination on Thursday. The ECB is extensively anticipated to keep rates of interest on maintain for the fifth consecutive assembly, leaving the primary refinancing operations, the marginal lending facility, and the deposit facility at 2.15%, 2.4%, and a pair of%, respectively. 

Additionally, ECB President Christine Lagarde will maintain a press convention afterward to clarify policymakers’ reasoning behind the choice. 

Ahead of the announcement, the EUR/USD pair trades above the 1.1800 mark, stabilizing after retracing sharply from January’s peak at 1.2082. 

Sponsored

Sponsored

What to count on from the ECB rate of interest determination? 

The ECB is in a good place and plans to stay there, refraining from any additional financial coverage motion. The ECB was among the many first main central banks to cut charges after post-pandemic inflation peaks that drove multi-decade highs in charges. President Christine Lagarde’s newest mantra has been that financial coverage is in a “good place,” and is anticipated to repeat the message. 

The Governing Council determined to keep charges unchanged at its December assembly, offering no recent clues about future motion. As ING famous, “The minutes of the ECB’s December meeting confirm the ECB’s wait-and-see stance in a macro environment, in which the base case looks very benign, but risks remain unusually high.” 

In the meantime, macroeconomic information launched within the final couple of months affirm officers’ stance. The Euro space economic system has not solely been resilient however is lastly exhibiting indicators of enchancment. 

According to the newest Eurostat information, the European Union (EU) grew by 0.3% quarter-on-quarter within the three months to December, whereas the 2025 Gross Domestic Product (GDP) grew by 1.6% year-on-year. 

In the meantime, inflation cooled down in January, as anticipated. Eurostat reported that the Harmonized Index of Consumer Prices (HICP) rose 1.7% within the yr to January as anticipated, whereas easing from the 1.9% posted in December. The core HICP, which excludes unstable parts corresponding to food or power, rose by 2.3% as anticipated, matching the earlier month’s determine.

Finally, it’s value remembering that, talking after the ECB’s closing Governing Council assembly, President Lagarde made it clear that, provided that financial coverage is in a “good place,” this doesn’t indicate a fixed or predictable path for charges. She additionally emphasised the ECB’s meeting-by-meeting method. 

In this situation, the upcoming financial coverage determination is prone to be a non-event. The basic consensus is that the ECB will keep its hawkish stance and that President Lagarde will repeat the message that the ECB is in wait-and-see mode, attentive to financial developments with out a pre-set financial path. 

How might the ECB assembly impression EUR/USD? 

The EUR/USD pair is secure above 1.1800 forward of the announcement, following unstable price motion over the earlier two weeks. The EUR/USD pair additionally trades roughly 300 pips beneath its current peak, but retains most of its 2025 good points. 

Valeria Bednarik, FXStreet Chief Analyst, notes: “Technically speaking, the EUR/USD pair bearish case seems well-limited. In the daily chart, the pair holds well above all its moving averages, with a bullish 20-day Simple Moving Average (SMA) heading north above the 100 and 200 SMAs while providing support at around 1.1760. At the same time, technical indicators have picked up after nearing their midlines, presenting uneven upward strength at the time of writing.” 

Bednarik provides: “The EUR/USD pair bottomed at around 1.1775 earlier in the week, making the 1.1760-1.1770 area the immediate downward barrier. A slide below the level exposes the 1.1700 threshold, en route to the 1.1640 price zone. Bulls will be looking for a recovery beyond 1.1920 to add longs, aiming for a test of the 1.2000 mark.”