Europe's central bank maintains interest rate with economic growth resilient

FRANKFURT, Germany (AP) — The European Central Bank left interest rates unchanged Thursday as the economy in the 21 countries that use the euro chugs past the disruption from U.S. President Donald Trump’s tariffs with modest yet resilient growth.

The bank left its benchmark deposit rate at 2%, where it has been since June. after a series of cuts from the peak of 4% starting in mid-2024.

“The economy remains resilient in a challenging global environment,” bank President Christine Lagarde said, opening her post-meeting news conference. She said growth is being supported by low unemployment, increased government spending on defense and infrastructure, and the past series of rate cuts.

“At the same time, the external environment remains challenging owing to higher tariffs and a stronger euro," she said.

She said “our monetary policy is in good shape” and offered no indication of future rate moves, saying that the bank would make decisions “meeting by meeting... in this world of signicant uncertainty.”

The reduced rate has been low enough to re-start mortgage lending for home sales and new construction due to reduced credit costs, boosting growth. Low unemployment is also contributing to demand for goods by consumers and helping keep the economy resilient without the stimulus of further rate cuts.

As a result, the chief monetary authority for the eurozone may leave its rates unchanged into 2027, analysts say. The eurozone grew a stronger than expected 0.3% in the last three months of 2025, and may reach growth of 1.3% for all of this year, according to forecasts by Berenberg bank.

Growth prospects have brightened due to anticipation of higher spending on infrastructure and defense by Germany, the eurozone’s biggest economy. In France, the culmination of Prime Minister Sebastien Lecornu’s long and difficult battle to enact a 2026 budget -- eventually using special powers to force it through a deadlocked parliament without a vote -- lifted a dark shadow from the No. 2 eurozone economy.

Meanwhile energy costs have abated since a painful spike in the wake of Russia’s invasion of Ukraine in 2022.

Europe weathered months of uncertainty as Trump threatened to raise tariffs to levels that could have choked off much of Europe’s trade with the US. In the end, a deal with the EU’s executive commission capped the tariff rate at 15%, a sharp increase from 4.8% previously but not as bad as feared. The deal removed uncertainty and let businesses plan. That’s despite Trump’s brief threat to add more tariffs on some EU countries that opposed his demands for a US takeover of Greenland.

Inflation has fallen to below bank’s target of 2%, coming in at 1.7% in January. Economists at Berenberg said they expect the bank to leave rates unchanged until strengthening growth calls for a rate hike in mid-2027. Rate hikes combat inflation by raising credit costs and dampening demand for good bought on credit, from houses to new factories.

President of the European Central Bank (ECB) Christine Lagarde speaks at the press conference after the Governing Council meeting of the ECB, in Frankfurt, Germany, Thursday Feb. 5, 2026. (Florian Wiegand/dpa via AP)

Governor of the Bank of England, Andrew Bailey, talks during a Bank of England Monetary Policy Report press conference in London, Thursday, Feb. 5, 2026. (Carl Court/Pool Photo via AP)

Governor of the Bank of England, Andrew Bailey, 2nd left, flanked by Clare Lombardelli, from left, Katie Martin, and Dave Ramsden talks during a Bank of England Monetary Policy Report press conference in London, Thursday, Feb. 5, 2026. (Carl Court/Pool Photo via AP)

Governor of the Bank of England, Andrew Bailey, talks during a Bank of England Monetary Policy Report press conference in London, Thursday, Feb. 5, 2026. (Carl Court/Pool Photo via AP)

FILE - The Euro sculpture stands in front of the former headquarters of the European Central Bank (ECB) in Frankfurt, Germany, Tuesday, May 23, 2023. (AP Photo/Michael Probst, File)

Governor of the Bank of England, Andrew Bailey, talks during a Bank of England Monetary Policy Report press conference in London, Thursday, Feb. 5, 2026. (Carl Court/Pool Photo via AP)

SEOUL, South Korea (AP) — French President Emmanuel Macron and South Korean President Lee Jae Myung agreed Friday to work together to help reopen the Strait of Hormuz and ease global economic uncertainties caused by the war in the Middle East.

Their summit in Seoul came as U.S. President Donald Trump slammed allies for not supporting the U.S. and Israeli war against Iran. Macron was making his first visit to South Korea since taking office in 2017, as part of an Asian tour that already has taken him to Japan.

Macron told Lee at the start of the meeting that the two countries can play a role in helping to stabilize the situation in the Middle East, including Iran’s chokehold on the Strait of Hormuz, which has unleashed shock on global energy markets.

At a joint televised briefing afterward, Macron underscored the need for France and South Korea to cooperate to help reopen the strait and deescalate Middle East animosities, while Lee said the two affirmed “their resolves to cooperate to secure the safe shipping route in the Strait of Hormuz.”

The two leaders did not take questions and did not elaborate on how they would help reopen the strait — the narrow waterway between Iran and Oman through which about one-fifth of the world’s oil usually passes.

“We need to clearly define, at the international level, the conditions for a process to ease the crisis and conflict in the Middle East,” Macron said. “We need to ensure that the Strait of Hormuz is reopened.”

Lee said he and Macron agreed to expand cooperation in technology, energy and other areas. South Korean and French officials also signed agreements to cooperate on nuclear fuel supply chains, jointly invest in an offshore wind project in southern South Korea and to collaborate on critical minerals. South Korea has moved to increase output at its nuclear reactors to mitigate the energy crunch and Lee has also called for a faster transition to renewable energy, saying the war has exposed the country’s heavy reliance on fossil fuel imports.

Macron’s Asia trip comes as Trump has ramped up his frustration with allies. In a speech Wednesday, Trump said Americans “don’t need” the strait but the countries who do “must grab it and cherish it.”

In an earlier Easter event at the White House, Trump called for his allies in Asia and China to get involved in reopening the waterway.

“Let South Korea, you know, we only have 45,000 soldiers in harm’s way over there, right next to a nuclear force — let South Korea do it,” Trump said. “Let Japan do it. They get 90% of their oil from the strait. Let China do it.”

The United States stations about 28,000 troops in South Korea, not the 45,000 stated by Trump. The U.S. troops’ deployment in South Korea is meant to deter potential aggressions from North Korea.

Macron has said reopening the Strait of Hormuz through a military operation is unrealistic.

South Korean officials have said they are in contact with Washington on the issue and that Seoul isn’t considering paying Iran transit fees to secure fuel shipments through the strait.

French President Emmanuel Macron, front left, his wife Brigitte Macron, back center, and South Korean President Lee Jae Myung, front right, and his wife Kim Hea Kyung, right, attend the welcome ceremony at the presidential Blue House in Seoul Friday, April 3, 2026. (Jung Yeon-je /Pool Photo via AP)

French President Emmanuel Macron, center, his wife Brigitte Macron, left, and South Korean President Lee Jae Myung, right, and his wife Kim Hea Kyung, second left, attend the welcome ceremony at the presidential Blue House in Seoul Friday, April 3, 2026. (Jung Yeon-je /Pool Photo via AP)

French President Emmanuel Macron, second left, talks with South Korean President Lee Jae Myung, second right, during their meeting at the Blue House in Seoul, South Korea, Friday, April 3, 2026. (Jung Yeon-je/Pool Photo via AP)

French President Emmanuel Macron shakes hands with South Korean President Lee Jae Myung during their meeting at the Blue House in Seoul, South Korea, Friday, April 3, 2026. (Jung Yeon-je/Pool Photo via AP)