Following the February policy meeting, the European Central Bank (ECB) decided to maintain interest rates unchanged for the fifth consecutive time, holding the benchmark deposit rate at 2.15%. While the official statement reiterated "close monitoring" of exchange rate fluctuations, ECB Governing Council member and Bank of Greece Governor Yannis Stournaras indicated there is currently no cause for concern. Stournaras stated, "We are continuously monitoring the exchange rate and all variables affecting economic activity and inflation." He specifically emphasized that the euro's persistent strength since March 2025 has been incorporated into the ECB's forecasting framework, and the current EUR/USD rate remains stable within its historical trading range. "Most of the appreciation occurred during the first quarter of last year," he further explained on Friday. "Therefore, this is not a volatile movement and should not prompt us to alter our established policy direction."

These remarks came less than a day after the ECB's fifth consecutive decision to maintain the deposit rate at 2%. On Thursday, ECB President Christine Lagarde reiterated that officials view the current economy as being "in good shape," while downplaying the impact of the euro's recent rise. Most investors and economists anticipate no further reductions in borrowing costs following the eight rate cuts implemented earlier in this cycle. Other policymakers share Stournaras's view on the euro. Bank of France Governor François Villeroy de Galhau noted, "The dollar exchange rate has recently stabilized, with EUR/USD around 1.18—coincidentally, this is precisely the historical average since the euro's inception in 1999." Latvian Central Bank Governor Mārtiņš Kazāks also stated that the euro has fluctuated within a relatively narrow range in recent months, stressing these movements are "already factored into" the ECB's baseline scenario. However, he warned that a "significant and rapid" appreciation of the dollar could lower the eurozone's inflation outlook and "might trigger a policy adjustment."

In response, Stournaras believes the risks to the inflation and growth outlook are currently balanced, describing the decision-making body as "quite confident." He reiterated, "We should not change our established course of action; our decisions are always data-dependent. So far, this approach has proven effective." Bank of Spain Governor José Luis Escrivá separately expressed optimism about the current price situation but emphasized that policymakers stand ready to act swiftly if necessary. He noted, "We observe inflation expectations firmly anchored at the target level, with forecasts for the next two years remaining within this range. All indicators suggest that maintaining stable interest rates is the optimal strategy at present."

The European economy has demonstrated resilience to external shocks such as tariffs, with fourth-quarter GDP expanding by 0.3%, outperforming market expectations. Expanded government spending plans in Germany and other eurozone countries are expected to provide continued support for growth. Nevertheless, underlying risks remain significant. The unpredictability of US trade policy poses a major external threat, while the latest data showing eurozone inflation dropping to 1.7% in January could strengthen the position of the minority within the ECB's Governing Council advocating for looser policy. Although the ECB forecasts inflation will return to its 2% target by 2028, the interplay between current inflation trends and the policy path will persist. Bank of Finland Governor Olli Rehn stated in a blog post, "There is a tangible risk of inflation undershooting expectations." He cited factors such as weak economic expansion, slowing wage growth, a stronger euro, and increased imports from China.

According to a survey published by the ECB on Friday, professional forecasters maintained their October expectations for the eurozone's inflation outlook. They project the long-term inflation rate will stabilize at 2%—having dipped briefly below that level this year—and will fluctuate slightly above it by 2028. Analysts expect growth in 2026 to be slightly stronger than previously anticipated, due to better-than-expected economic performance at the end of last year. Bank of Estonia Governor Madis Müller wrote in a blog post, "Over the past few months, the euro area economy has delivered no major surprises. The ECB's December projections continue to provide a solid basis for interest rate decisions." Stournaras described the ECB as having achieved a soft landing, characterising the current situation as a "stable equilibrium."