ISTANBUL 

The European Central Bank (ECB) on Thursday left its three key interest rates steady, meeting market expectations.

The key deposit rate now stands at 2%, its lowest level since November 2022.

The interest rates on the main refinancing operations and the marginal lending facility are at 2.15% and 2.40%, respectively.

The decision to hold rates steady is the second one in a row. The bank last cut rates at its June meeting, marking an eight rate cut-run, which started when ECB initiated its easing cycle in June 2024.

The bank said inflation is currently at around the Governing Council’s 2% medium-term target.

"The new ECB staff projections present a picture of inflation similar to that projected in June. They see headline inflation averaging 2.1% in 2025, 1.7% in 2026 and 1.9% in 2027," the bank said in a statement.

The euro area economy is projected to grow by 1.2% in 2025, revised up from the 0.9% expected in June. The growth projection for 2026 is now slightly lower, at 1.0%, while the projection for 2027 is unchanged at 1.3%, according to the central bank.

The ECB stressed that it is determined to ensure that inflation stabilizes at its 2% target in the medium term

"It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission," the EU monetary institution added.

The decision came after the eurozone's annual inflation ticked up to 2.1% in August, from 2% in July, slightly above the ECB's medium-term target.