ECB Holds Rates at 2% as EU Inflation Climbs and Growth Stalls

ECB Holds Rates at 2% as EU Inflation Climbs and Growth Stalls

Thursday 30th April 2026 – 15:25 (BST)

The European Central Bank kept its benchmark deposit rate on hold at 2.0% today, opting to wait out a sharp pick-up in headline inflation while activity across the bloc shows fresh signs of stalling. Markets had broadly expected the pause, although the tone of the accompanying statement struck a more cautious note than recent communications.

Eurozone inflation jumped to 3.0% in April, up from 2.4% in March and well above the central bank’s 2.0% target. The increase was driven largely by a renewed surge in energy costs tied to the ongoing conflict in Iran, which has pushed crude prices sharply higher and disrupted shipping routes through the Strait of Hormuz. Core inflation, which strips out food and energy, was steadier at 2.2%, pointing to relatively contained underlying pressure for now.

The release came alongside softer-than-expected first quarter growth figures. Eurozone GDP expanded just 0.1% on the quarter, below consensus expectations of 0.2% and a clear slowdown on the pace seen at the end of 2025. Annual growth eased to 0.8%, with Ireland, Lithuania and Sweden all posting outright contractions. The data leaves policymakers walking a thin line, a tension Christine Lagarde acknowledged by warning that “the upside risks to inflation and the downside risks to growth have intensified”.

What it means for GBP/EUR

For currency markets, the decision keeps the euro on the defensive. The single currency slipped against the dollar and gave back some of its recent gains versus sterling, with GBP/EUR holding near 1.1550. Markets are now pricing the next ECB move as more likely a hike than a cut, with attention shifting to June’s meeting, where the trade-off between price stability and weakening growth will be tested again.