Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday and Thursday, 17-18 December 2025

22 January 2026

1. Review of financial, economic and monetary developments and policy options

Financial market developments

Ms Schnabel started her presentation by noting that, since the Governing Council’s previous monetary policy meeting on 29-30 October 2025, the financial market narrative that ECB interest rates were in a good place had been further consolidated. Incoming data had reinforced expectations that inflation would remain close to the 2% target over the medium term and that the euro area economy would grow at a rate near potential. On the back of the resilient economy and stickier services inflation, expectations of further rate cuts had vanished, with both markets and survey participants expecting policy rates to remain at their current levels for an extended period. Better than expected macroeconomic…