Finance
ECB leaves rates unchanged, shrugs off inflation dip
Published by Global Banking & Finance Review®
Posted on February 5, 2026
2 min readLast updated: February 5, 2026
Quick Summary
The ECB kept interest rates steady, ignoring inflation dips, with focus on geopolitical risks and eurozone economic strength.
ECB Holds Interest Rates Steady Amid Falling Inflation Concerns
ECB's Decision on Interest Rates
LONDON, Feb 5 (Reuters) - The European Central Bank left interest rates unchanged as expected on Thursday, shrugging off a dip in inflation while continuing to warn about an uncertain geopolitical environment.
The euro hovered around $1.1794, a touch lower on the day. Government bond yields across the euro area were largely flat with Germany's benchmark 10-year bond yield steady at around 2.86%.
The pan-European STOXX 600 index held lower on the day, down around 0.6%
Market Reactions
Focus now turns to ECB President Christine Lagarde's press conference at 1345 GMT.
COMMENTS:
MARCHEL ALEXANDROVICH, EUROPEAN ECONOMIST, SALTMARSH ECONOMICS:
Expert Opinions
"The ECB keeps interest rates on hold and sticks to its ‘steady for longer’ forward guidance. Of course, beyond the central message, there is plenty for the ECB to focus on, including the strength of the currency, commodity prices, and U.S. policy – subjects which will undoubtedly come up at Lagarde’s press conference."
IRENE LAURO, SENIOR ECONOMIST, EUROPE AND CLIMATE, SCHRODERS:
"Euro zone growth continues to outperform expectations, with domestic demand gaining momentum as lower interest rates and fiscal support filter through the economy.
Inflation Insights
"Yes headline inflation has dipped below target, but the ECB will largely look through this given the volatility in energy prices. Instead, policymakers will remain focused on services inflation, which is still running uncomfortably high and set to be exacerbated by the expected end of the slowdown in wage growth this year.
"Today’s decision has confirmed our view that the next move from the ECB will be up, rather than down."
(Reporting by the Reuters Markets Team; Compiled by Dhara Ranasinghe)
Key Takeaways
- •ECB leaves interest rates unchanged despite inflation dip.
- •Focus on geopolitical risks and eurozone economy strength.
- •Christine Lagarde's press conference is anticipated.
- •Eurozone growth outperforms expectations.
- •Inflation volatility due to energy prices is noted.
Frequently Asked Questions about ECB leaves rates unchanged, shrugs off inflation dip
1What is the European Central Bank?
The European Central Bank (ECB) is the central bank for the eurozone, responsible for monetary policy, including setting interest rates and controlling inflation to ensure price stability.
2What are interest rates?
Interest rates are the cost of borrowing money, expressed as a percentage of the amount borrowed. They influence economic activity by affecting consumer spending and investment.
3What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks aim to manage inflation to maintain economic stability.
4What is monetary policy?
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation and stabilizing currency.
5What is economic growth?
Economic growth is an increase in the production of goods and services in an economy over a period, typically measured by the rise in Gross Domestic Product (GDP).
