# ECB Holds Interest Rates Steady as Inflation Stabilises - February 2026 ## Interest rate decision Today, the Governing Council of the European Central Bank announced its decision to **keep interest rates unchanged** (deposit facility - 2%, main refinancing operations - 2.15% and marginal lending facility - 2.40%), during a press conference held by President Christine Lagarde and Vice-President Luis de Guindos. The ECB reaffirmed that its primary objective remains **price stability**, with inflation anchored at the **2% target**. We previously explored this on [ECBs inflation deviation and monetary policy](https://mrinvest.io/ecbs-inflation-deviation-and-monetary-policy-speech-a-simple-breakdown). --- ## Economic activity Economic growth remained modest at the end of 2025, with GDP expanding by **0.3%**, mainly driven by the **services sector**, particularly information and communication services. Unemployment remains low at **around 6%**, while rising incomes and lower household savings are expected to support consumption. Business investment is also projected to strengthen. However, the ECB highlighted several global challenges, including: * trade tariffs * a stronger euro * a more uncertain international environment The Governing Council stressed the **urgent need to strengthen the euro area**, especially in the current geopolitical context. Governments were encouraged to focus on **sustainable public finances** and **growth-enhancing reforms**. This message aligns with themes discussed in our broader [Economic Outlook of Europe - Q1 2026](https://mrinvest.io/economic-outlook-europe-q1-2026-explained). --- ## Inflation Inflation declined to **1.7% in January**, down from **2.0% in December**. Underlying inflation indicators have changed little in recent months and remain **consistent with the ECB’s 2% target**. Most measures of longer-term inflation expectations continue to hover around this level, supporting the view that inflation is stabilising. --- ## Risks to the outlook The ECB highlighted **continued uncertainty** facing the euro area. Downside risks to growth include: * a volatile global policy environment * weaker global demand * tighter financial conditions * frictions in international trade * ongoing geopolitical conflicts On the upside, planned **defence, infrastructure, and technology investment** could support growth more than expected, improving business and consumer confidence. New trade agreements could also contribute positively. Inflation risks follow similar patterns: **Lower inflation risks** * weaker export demand due to tariffs * a stronger euro **Higher inflation risks** * supply chain disruptions * rising energy prices These themes are closely linked to recent geopolitical developments discussed on our article about the relation between [Geopolitical instability and Europe](https://mrinvest.io/geopolitical-instability-and-europe-why-global-power-struggles-matter-for-the-economy-and-investors). --- ## Financial and monetary conditions The **average interest rate** on new mortgages **remained stable at 3.3% in December**. The ECB noted a rising demand for loans and signs of easing credit conditions in parts of the market. These developments are important for Europe, where bank lending plays a central role in economic activity. For more context, see our article on the [ECB’s financial stability review - november 2025](https://mrinvest.io/ecb-financial-stability-review-november-2025-simple). --- ## Conclusion The ECB reiterated that future interest rate decisions will remain **data-dependent** and based on: the inflation outlook, risks surrounding inflation, incoming economic and financial data and the strength of monetary policy transmission. As President Lagarde stated clearly: > *“We are not pre-committing to a particular rate path.”* Sources: * [ECB Monetary Policy Statement – Press Conference (4 February 2026)](https://www.ecb.europa.eu/press/press_conference/monetary-policy-statement/2026/html/ecb.is260205~50858cb986.en.html) * [ECB Press Release – Monetary Policy Decisions](https://www.ecb.europa.eu/press/pr/date/2026/html/ecb.mp260205~001d26959b.en.html)