Europe's central bank maintains interest rate with economic growth resilient

Economic Overview - The European Central Bank (ECB) has maintained its benchmark deposit rate at 2% since June, following a series of cuts from a peak of 4% in mid-2024, indicating a stable monetary policy amidst modest economic growth in the eurozone [1][3] - The eurozone's economy has shown resilience, with a growth rate of 0.3% in the last quarter of 2025 and an expected annual growth of 1.3% for the current year, as per forecasts from Berenberg bank [3] Factors Influencing Growth - Low unemployment rates are driving consumer demand for goods, contributing to economic resilience without the need for further rate cuts [2] - Anticipation of increased infrastructure and defense spending in Germany, the largest economy in the eurozone, has improved growth prospects [4] - The resolution of budgetary challenges in France has also positively impacted the economic outlook for the eurozone's second-largest economy [4] Inflation and Monetary Policy - Inflation in the eurozone has decreased to 1.7% in January, below the ECB's target of 2%, leading economists to predict that the ECB will keep rates unchanged until mid-2027, when stronger growth may necessitate a rate hike [7] - The ECB's strategy of maintaining low rates aims to combat inflation by managing credit costs and demand for goods purchased on credit [7] External Economic Factors - Energy costs have stabilized following a significant spike due to geopolitical tensions, particularly the impact of Russia's invasion of Ukraine in 2022 [5] - The resolution of tariff uncertainties with the U.S. has allowed European businesses to plan more effectively, despite initial fears of increased tariffs that could have severely impacted trade [6]