Policy Decision: Rates Hold Steady, Stability is the Main Theme
At its meeting on February 5, 2026, the European Central Bank decided to keep the three key interest rates unchanged, continuing its approach of "observe first, then act." The official statement emphasized that inflation is expected to stabilize around the 2% target in the medium term, and the economy remains resilient despite a complex external environment.
Data Context: Declining Inflation and Rising Growth Provide Room for "Observation"
The latest inflation report shows that the estimated inflation in the eurozone for January 2026 is 1.7%, which is a decrease from the previous value. Meanwhile, a GDP flash estimate indicates that the eurozone's GDP growth for the entirety of 2025 was approximately 1.5%, better than the previous year and exceeding some prior forecasts by institutions.
Given the combination of "low inflation and satisfactory growth," the policy remains at its current level, which comes as no surprise to the market.
Risk Variables: Strong Euro Lowers Import Costs, Inflation Could Be Further "Contained"
One of the focal points within the European Central Bank is shifting from "are rates tight enough" to "could the exchange rate cause inflation to drop further." A stronger euro relative to the dollar reduces import prices (especially for energy), and when inflation is already fluctuating near the target, this effect is more likely to change the direction of policy discussions.
Institutional Perspective: Deutsche Bank Outlines Three Trigger Conditions, "Rate Cuts Not Completely Ruled Out"
Economists at Deutsche Bank, in their client report, provided a baseline judgment that there is a high likelihood of maintaining rates in 2026; however, the risks lean towards "further easing," due to the possibility that inflation may run persistently below the target.
They also suggest that if the euro continues to strengthen, eurozone growth weakens, or inflation decelerates further, the threshold for the European Central Bank to reconsider rate cuts within the year may be lowered. Additionally, geopolitical factors and external deflationary pressures are heightening uncertainty.
