ECB leaves rates unchanged as expected

29th Oct 2026 13:36

(Sharecast News) - The European Central Bank left interest rates unchanged on Thursday as widely expected.

The Bank, which has lifted rates twice since June, left the deposit rate at 2.50%, while the interest rates on the main refinancing operations and the marginal lending facility were held at 2.65% and 2.90%, respectively.

The ECB said: "Energy prices have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook. While the full effects of the energy shock are still unfolding, underlying inflation has remained broadly stable so far and wages do not show a material response at this stage. The increased magnitude and duration of the energy shock, as well as the implications for indirect and second-round effects, are likely to drive up inflation and lower growth. Financing conditions have tightened since the Governing Council's last meeting, which is likely to weigh on inflation and growth.

"The Governing Council is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term."

ING said a pause after two rate hikes this year was expected, even if macro developments since the last meeting could have justified another rate hike.

"Headline inflation increased again in September and most leading indicators point to continued resilience in the eurozone economy," said global head of macro Carsten Brzeski. "However, the surge in bond yields on the back of the French crisis is already imposing a new restrictive monetary policy stance. Or in other words, the bond market has taken over the ECB's job."

The interest rate announcement came just hours after the ECB said that president Christine Lagarde plans to step down on 7 February 2027, before the end of her term. Lagarde had been due to step down next October.

European Council Antonio Costa said: "I would like to thank Madame Lagarde for her dedication as president of the ECB since November 2019. Throughout her mandate, she has led the European Central Bank with a strong sense of duty and responsibility. Europe has been well served by her leadership in uncertain times and her unwavering commitment to the European project.

"Through a global pandemic, a war in Europe, energy crises and inflation shocks, she has provided a steady and determined stewardship, helping to safeguard stability and the resilience of the euro area."

Costa said the process for the appointment of her successor will be initiated immediately and "will proceed without delay".