Four European Central Banks Decide on Interest Rates in December 2025

On December 18, 2025, four European central banks made their monetary policy decisions during the last meetings of the year, reflecting the varying trajectories of European economies as inflationary pressures ease and growth varies.

The European Central Bank kept interest rates unchanged, maintaining the deposit facility rate at 2.00%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%. The bank emphasized its data-driven approach and the evaluation of each meeting individually, amid expectations of improved growth and stable inflation near the medium-term target.

In the United Kingdom, the Bank of England took a different step by lowering the interest rate by 25 basis points to 3.75%, amid a slowdown in economic activity and persistent inflation pressures. Governor Andrew Bailey confirmed that the interest rate trajectory is moving toward gradual reductions without committing to a specific pace of cuts.

In Northern Europe, Norges Bank opted to keep the interest rate at 4.00%, supported by the resilience of the local economy and improved forecasts, while the Swedish Central Bank (Riksbank) maintained its interest rate at 1.75%, coinciding with raised growth estimates for the upcoming year.

The issuance of these four interest rate decisions on the same day reflects a transitional phase in European monetary policy, as some banks appear closer to the end of the tightening cycle, while others cautiously move towards gradual easing. Markets are closely watching the interest rate trajectory for 2026 and its impact on European currencies and stocks.