The European Central Bank kept its main interest rates unchanged on Thursday, signaling caution as the eurozone economy shows tentative signs of improvement. Policymakers said recent data point to a more stable outlook, but they still view the recovery as fragile.

The decision reflects the ECB’s effort to balance slowing inflation pressures with uneven growth across the currency bloc. While some indicators have improved, officials remain wary of external shocks, weak investment, and lingering uncertainty for households and businesses.

Markets had widely expected the pause, with attention now turning to future meetings and whether the ECB sees enough momentum to adjust policy later in the year. For now, the central bank is holding back from any move that could unsettle a recovery that remains vulnerable.

The latest decision underscores the ECB’s wait-and-see approach as it watches inflation, wages, and growth data for clearer signs that the euro area can sustain a stronger expansion without fresh policy support.