The European Central Bank is leaving interest rates unchanged now that price pressure is easing

The European Central Bank held interest rates steady for the second time in a row on Thursday, reinforcing the impression that interest rates have peaked in the bank’s efforts to tamp down high inflation.

Officials kept the deposit rate, one of the central bank’s three key interest rates for the 20 countries that use the euro, at 4 percent, the highest in the institution’s 20-year history. The other two rates also remained unchanged.

Eurozone inflation fell to 2.4 percent in November, the lowest in two years, falling faster than economists expected. That’s closer to the European Central Bank’s inflation target of 2 percent, as energy prices have fallen over the past year and food inflation has eased. But to ensure inflation returns sustainably to that target, policymakers have been keeping an eye on other measures that measure price pressures. Core inflation, which excludes food and energy prices, was 3.6 percent, down from a peak of 5.7 percent in March.

With price pressures easing across the bloc, policymakers at the European Central Bank are now focused on convincing investors not to cut rates too quickly before they are confident that the risk of a prolonged period of high inflation has diminished . But economic growth has virtually come to a standstill over the past year, and so have some policymakers and analysts remain concerned that monetary policy is too restrictive and could cause unnecessary economic pain.

In a statement accompanying the policy decision, the Governing Council gave no indication that interest rate cuts would take place anytime soon. Policymakers said interest rates were at a level that, if maintained for a “sufficiently long duration,” would push inflation toward the target.

“The Governing Council’s future decisions will ensure that the policy rate is set at sufficiently restrictive levels for as long as necessary,” the statement said. The bank’s president, Christine Lagarde, will later hold a press conference in Frankfurt to explain the board’s decision.

Earlier on Thursday, the Bank of England kept interest rates at their highest level in fifteen years and gave no signal that interest rates would be cut anytime soon. On Wednesday, the US Federal Reserve left interest rates unchanged, but indicated that interest rates could be cut three times next year.

The European Central Bank said that high interest rates are having an effect on the eurozone economy. By some measures the impact was stronger than expected, for example on weakening demand for corporate and household loans. The impact is expected to increase as the economy sputters, prompting expectations of a rate cut.

Central bank officials said economic growth would remain “moderate” in the near term. The bloc’s economy will grow by 0.8 percent next year, the banks forecast, down from the previous forecast three months ago.