The ECB held its rate at 2.00%.

At its April 30 Governing Council meeting, the ECB held the policy rate (the deposit facility rate) at 2.00%. It paused for now after the eight rate cuts that ran from June 2024 bottomed the rate out at 2.00%. The ECB regards 2.00% as a neutral level that "neither heats nor cools the economy."

Behind the hold was a shift in the price winds. March HICP (consumer prices) rose to +2.6% year on year, up from +1.9% in February. Higher energy costs tied to Middle East tensions had begun to bite. President Lagarde stressed a cautious stance — decisions are "made meeting by meeting based on the data, without committing to a particular rate path" — signaling no rush to resume cuts and a readiness to assess the price trend.

After long keeping rates negative (−0.50%), the ECB hiked rapidly from July 2022 against post-pandemic inflation. The deposit rate peaked at 4.00% in September 2023. It then fell to 2.00% over eight cuts, and at this April meeting it held — stopping midway down the slope.

2.00% is also the "trough" of the easing cycle. Had prices settled, a debate over further cuts from here should have emerged — but with prices re-igniting on higher energy costs, the flow reversed. The bank has entered a difficult phase where the next move has to be seen as "up," not "down."

Prices stepped up sharply in three months. HICP (Harmonised Index of Consumer Prices) rose from +1.9% in February to +2.6% in March, and to +3.0% on the April flash reading. The main driver was energy: April energy prices surged +10.9% year on year. Middle East tensions are feeding directly into euro-area prices.

With prices breaking above the target and accelerating, the ECB's calculus shifts from "resuming cuts" toward "considering a hike." Wage-sensitive services prices are also staying high at around +3%, and whether high prices spread beyond energy became the next focus.

Whereas the central banks of Japan and the U.S. mainly move one rate, the ECB has three key rates. Among them, the "deposit facility rate (2.00%)" — what banks earn for parking funds at the ECB — is the de facto policy rate today (the benchmark guiding market rates).

The marginal lending facility (2.40%) is the ceiling rate at which banks borrow overnight from the ECB, and the main refinancing operations rate (2.15%) sits in the middle. The three form a corridor that sets the "ceiling, middle and floor" of market rates.

Monetary policy is set by the Governing Council, which meets roughly every six weeks. Twenty-seven people attend — the six Executive Board members at ECB headquarters and the governors of the 21 countries that use the euro. But voting rights are limited to 21 votes, with governors voting on a monthly rotation (Bulgaria joined in January 2026, bringing the total to 21 countries).

The governors' rotation is weighted by economic size. The top five countries — Germany, France, Italy, Spain and the Netherlands — share 4 votes, and the other 16 countries share 11 votes, each on a monthly rotation. Most decisions are reached by something close to unanimity (consensus).

The Council meets eight times a year, roughly every six weeks. At the March, June, September and December meetings, the ECB staff's economic and price projections are published. With this meeting (Apr 30) now done, the next is June 11.

The decision is announced at 14:15 Central European Time, with the President's press conference from 14:45. The next, June meeting will publish new staff projections, and the biggest focus is how much of the upside in prices gets reflected — and whether the easing cycle reverses into a "hike."

The euro is the world's second currency after the dollar. ECB rates heavily influence the euro exchange rate. As "hike expectations" emerge on re-accelerating prices, the euro tends to come under upward pressure. Against Japan, with euro-area rates higher, a backdrop of a stronger euro and weaker yen persists.