ECB Set to Stay Tight as Inflation Drops Below Target

With a policy decision due at 2:15 PM CET, the Governing Council of the European Central Bank gathers today; President Christine Lagarde will hold a press conference at 2:45 PM CET. The ECB is expected to maintain all major rates unchanged: the deposit facility at 2.00%, the main refinancing rate at 2.15%, and the marginal lending facility at 2.40%—levels in place since June 2025. Markets believe there is almost no chance of a move, which mirrors a general opinion among lawmakers that policy is presently in a “good place.”

The macro background gets more complex by the day. At 1.7% in January 2026, Eurozone headline inflation fell below the ECB's 2% target, mostly as a result of positive energy base effects. Still, underlying or core inflation remains near to levels suitable with possible growth, therefore reducing near-term strain for policy easing. A stronger euro supported by a softer USD adds a minor disinflationary pull, yet on a trade-weighted basis Officials see the action as little and not yet a spark for political change.

Today's communication will probably strengthen a "wait-and-see," data-dependent attitude. Fresh ECB personnel predictions call for 2026 inflation of about 1.9%, with dangers skewed toward falling short of the objective but yet not great enough to prompt near-term rate reduction. With the chance of increases appearing in 2027 if growth and inflation prove more tenacious than presently predicted, many analysts—including those at Deutsche Bank—project rates to remain on hold throughout 2026.