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The European Central Bank has held its benchmark interest rate at 2 per cent for the fifth meeting in a row after recent growth in the Eurozone economy proved stronger than expected.

Thursday’s rate decision was in line with economists’ expectations.

It came after core inflation, which strips out volatile energy and food prices, fell in January to the lowest level since late 2021.

Fourth-quarter GDP growth in the Eurozone was slightly higher than economists predicted, at 0.3 per cent.

In its monetary policy statement on Thursday, the ECB’s governing council stressed that the economy “remains resilient in a challenging global environment”, pointing to low unemployment, increases in public investment and defence spending, and “solid” private sector balance sheets.

It also repeated its previous assessment that inflation “should stabilise” at its 2 per cent target in the medium term. Inflation fell to 1.7 per cent in January.

The euro was stable after the widely expected decision, slightly weaker on the day against the dollar at just below $1.18.

Traders in swaps markets continued to price a slim chance of a further cut in the benchmark rate this year, ascribing a roughly 30 per cent chance to a quarter-point reduction.

Sylvain Broyer, analyst at S&P Global Ratings, said that the ECB “can keep the autopilot on this time” as the stronger euro was acting as a “shock absorber” while growth “continues to outperform expectations”.

The ECB’s previous rate cuts, which began in June 2024, have pushed borrowing costs to their lowest level since December 2022.

This is a developing story