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ECB Holds Interest Rates Steady as Inflation Outlook Remains Uncertain

Published July 26, 2026 at 4:03 PM UTC

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The European Central Bank kept interest rates unchanged at its latest meeting, a widely expected move that signals caution amid mixed economic signals. The main deposit rate stays at 4%, the highest since the creation of the euro, as the ECB continues to balance the fight against inflation with growing recession risks. Inflation in the eurozone has fallen from its double-digit peak but remains above the 2% target, and underlying price pressures persist in services and wages. At the same time, the economy is stagnating, with manufacturing in recession and consumer demand weak. By holding rates, the ECB buys time to assess incoming data before its next move. The decision was unanimous, with policymakers stressing that future rate changes will depend on the evolving outlook. Businesses and households with variable-rate loans will get no immediate relief, but the pause may help prevent a sharper downturn. Markets now expect the first rate cut later this year, but the timing remains uncertain.