European Central Bank holds interest rate at 2.75% for a third meeting

The European Central Bank kept its main deposit rate unchanged at 2.75 percent on Thursday, the third meeting in a row without a move. The decision matched the expectation of every economist surveyed by the bank's own analysts and drew little reaction from bond markets.

In a short statement, the bank's Governing Council said euro-area inflation had settled close to its two-percent objective and that incoming data did not justify a change in either direction. Headline inflation stood at 2.1 percent in May, down from a peak of 10.6 percent in late 2022.

What the bank actually said

President Christine Lagarde told reporters that the council would remain "data-dependent and meeting-by-meeting," repeating language used at the two previous decisions. She declined to confirm market expectations of a single cut later in the year, saying only that policy was "in a good place."

“We are not pre-committing to any particular path. The data will decide, not the calendar.”

Economists read the steady tone as a sign that the bank is comfortable holding rates until it sees clear evidence that price growth will stay at target. Growth across the bloc has been modest but positive, removing the urgency to support demand with cheaper borrowing.

What happens next

The next decision is due in late July. Markets are pricing in a roughly one-in-three chance of a quarter-point cut at that meeting, rising to better than even odds by September.

For households, the hold means mortgage and savings rates are likely to stay broadly where they are through the summer.

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