ECB Keeps Interest Rates Unchanged, Lagarde Says Disinflation Process Has Concluded

On September 11 local time, the European Central Bank (ECB) announced in its latest interest rate decision that it would keep the deposit facility rate unchanged at 2%, with the main refinancing rate and marginal lending rate remaining at 2.15% and 2.40%, respectively, in line with market expectations. This marks the second consecutive time the ECB has maintained stable interest rates after pausing rate cuts in July.

ECB President Christine Lagarde stated at the post-meeting press conference that the disinflation process has concluded, and current inflation levels are close to the central bank’s target. Future interest rate decisions will be made meeting by meeting, based on data.

Lagarde emphasized during the press conference that the decision was unanimously approved, reflecting the Governing Council’s consensus on the current policy stance. She said, "The disinflation process is over, and inflation is now at the level where we want it to be." She added that minor fluctuations in the inflation rate around the target would not automatically trigger a policy response.

In its statement, the ECB noted that its assessment of the inflation outlook remains largely unchanged. The latest projections show that the eurozone’s average inflation will be 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027. Core inflation, excluding food and energy, is expected to be 2.4% in 2025, decline to 1.9% in 2026, and reach 1.8% in 2027. This indicates that medium-term inflation will largely stabilize around 2%.

Regarding asset purchases, the ECB stated that the Asset Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP) portfolios are being reduced at a steady and predictable pace. Lagarde added that the eurozone sovereign bond market is operating orderly, the balance sheet reduction is progressing smoothly, and the Transmission Protection Instrument (TPI) was not discussed at this meeting.