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ECB holds interest rates at 2%, as expected

By Michele Maatouk

Date: Thursday 05 Feb 2026

ECB holds interest rates at 2%, as expected

(Sharecast News) - The European Central Bank held interest rates at 2% on Thursday for the fifth meeting in a row, as widely expected.
It said inflation should stabilise at the Bank's 2% target in the medium term.

"The economy remains resilient in a challenging global environment," the ECB said in a statement.

"Low unemployment, solid private sector balance sheets, the gradual rollout of public spending on defence and infrastructure and the supportive effects of the past interest rate cuts are underpinning growth. At the same time, the outlook is still uncertain, owing particularly to ongoing global trade policy uncertainty and geopolitical tensions."

The Bank said it was maintaining a "data-dependent and meeting-by-meeting approach" to monetary policy.

ING said the policy announcement illustrates that the ECB still sits comfortably in its "good place".

"And, with the eurozone expected to grow at around potential and inflation to remain somewhere around 2%, there are very few arguments for challenging the ECB's 'good place'," it said.

"Looking ahead, if the ECB were to leave its good place, any first move would be a cut, not a hike - at least in the near term. Whether it is general market unease or, more specifically, the strengthening of the euro, there is still a risk of inflation undershooting over the coming months.

"As long as the cyclical recovery of the eurozone continues, any inflation undershooting should not be mistaken for deflationary risks, but could still encourage more dovish ECB members to push for an insurance rate cut."

Earlier on Thursday, the Bank of England left the cost of borrowing on hold as widely forecast, following a surprisingly close vote.

The rate-setting Monetary Policy Committee agreed by a majority of five to leave interest rates at 3.75%. The remaining four members backed a cut to 3.5%.

The decision to leave Bank Rate unchanged was long expected. But the closeness of the vote, alongside the MPC's accompanying minutes, boosted expectations for a cut in the coming months, potentially as early as March.

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