MNI BRIEF: ECB On Hold, Little Change in Inflation Outlook

The European Central Bank kept its three key interest rates unchanged on Thursday, with staff projections presenting a similar picture of inflation similar to June’s.

The deposit facility, main refinancing operations and marginal lending facility remain unchanged at 2.00%, 2.15% and 2.40% respectively, as expected, with policy to be decided on a meeting-to-meeting and data-dependent basis.  (See MNI SOURCES: Data-Led ECB To Hold A Cut In Reserve If Needed)

Inflation projections were slightly higher in the near-term and modestly lower over the medium term. Headline inflation is seen averaging 2.1% in 2025, 1.7% in 2026 and 1.9% in 2027. Inflation excluding energy and food is seen at 2.4% in 2025, 1.9% in 2026 and 1.8% in 2027.

The statement again recalled that the Transmission Protection Instrument "is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries.”