{"id":282866,"date":"2026-02-05T22:29:14","date_gmt":"2026-02-05T22:29:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/282866\/"},"modified":"2026-02-05T22:29:14","modified_gmt":"2026-02-05T22:29:14","slug":"ecb-keeps-rates-unchanged-despite-stronger-euro-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/282866\/","title":{"rendered":"ECB keeps rates unchanged despite stronger euro \u2013 The Irish Times"},"content":{"rendered":"

The European Central Bank (ECB)<\/a> held interest rates steady for a fifth straight meeting on Thursday despite ongoing geopolitical tensions and a marked strengthening of the euro which may be cooling inflation faster than expected.<\/p>\n

Policymakers kept the bank\u2019s headline deposit rate unchanged at 2 per cent.<\/p>\n

While insisting the bloc\u2019s economy remains resilient with low unemployment and solid private sector balance sheets, they cautioned that the wider economic outlook was \u201cstill uncertain, owing particularly to ongoing global trade policy uncertainty and geopolitical tensions.\u201d<\/p>\n

The ECB\u2019s decision came after data on Wednesday \u2060showed euro zone inflation fell to 1.7 per cent in January, undershooting the ECB\u2019s 2 per cent target, as lower energy costs and a stronger euro kept a lid on consumer price rises.<\/p>\n

The decision also comes against an increasingly volatile geopolitical backdrop with US president Donald Trump starting the year by ousting Venezuelan leader Nicol\u00e1s Maduro and threatening to annex Greenland. <\/p>\n

This has prompted a further weakening of the dollar against the euro which has the potential to damage EU exports in an already weak economy.<\/p>\n

\"\"Is it time Ireland abolished mandatory retirement?<\/p>\n

There is also a risk it could pull inflation further below the 2 per cent target rate.<\/p>\n

\u201cThe stronger euro could bring inflation down beyond current expectations,\u201d ECB president Christine Lagarde said while noting the euro\/dollar exchange rate, including the recent dollar depreciation, was discussed at the meeting.<\/p>\n

But she said the shift remained within the average range and had been incorporated into the bank\u2019s baseline forecasts.<\/p>\n

Lagarde again insisted that ECB policy and inflation were in \u201ca good place\u201d and that euro zone inflation was gradually moving to the bank\u2019s 2 per cent target rate.<\/p>\n

She also welcomed the appointment of Kevin Warsh as the next head of the Federal Reserve in the US.<\/p>\n

Markets expect the ECB to keep interest rates on hold for now, the strength of the euro muddies the waters somewhat.<\/p>\n

\u201cThis is one of those occasions when central banks need a good sense of balance to weigh the negatives against the positives,\u201d Deutsche Bank\u2018s chief European economist Mark Wall said.<\/p>\n

\u201cLeaving policy rates unchanged feels the right thing to do. There are external vulnerabilities, but there is also domestic resilience, helped in part by Germany\u2019s defence and infrastructure spending,\u201d he said.<\/p>\n

AIB chief economist David McNamara said: \u201cThe big picture is that the ECB continues to maintain a high bar for further rate cuts in the near term, despite inflation falling below target in January to 1.7 per cent from 2 per cent in December.\u201d<\/p>\n

\u201cHowever, that fall in inflation was almost entirely due to lower energy prices, which could unwind later in the year,\u201d he said.<\/p>\n

Separately the Bank of England kept interest rates on hold on Thursday, but only after an unexpectedly narrow 5-4 vote, and \u200bit said it expected a future cut if a sharp fall in inflation due in the coming months proved not to be a blip.<\/p>\n

Despite a big cut to its economic growth forecast this year and a rise in unemployment, the UK\u2019s central bank left its benchmark rate at 3.75 per cent, as expected.<\/p>\n","protected":false},"excerpt":{"rendered":"The European Central Bank (ECB) held interest rates steady for a fifth straight meeting on Thursday despite ongoing…\n","protected":false},"author":2,"featured_media":282867,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,14724,113,12965,61,60],"class_list":["post-282866","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-christine-lagarde","tag-economy","tag-european-central-bank-ecb","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/282866","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=282866"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/282866\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/282867"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=282866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=282866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=282866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}