ECB holds rates steady as inflation drifts back toward target

The European Central Bank’s Governing Council voted unanimously to keep its three key interest rates unchanged on Thursday, citing continued progress on disinflation and a labour market that is gradually rebalancing.

Headline inflation in the euro area stood at 2.1 percent in April, with core inflation easing to 2.3 percent. President Lagarde told reporters that policy remains “well-positioned” but ruled out pre-commitment to a specific rate path.

Markets had largely priced in the hold. The euro was little changed against the dollar in the immediate aftermath of the decision. Several Council members are understood to favour further easing in the second half of 2026 if disinflation continues at the current pace.

The next monetary policy decision is scheduled for June, when the Council will receive updated staff projections.