ECB holds interest rates as rising energy costs complicate inflation outlook

The European Central Bank kept its three key interest rates unchanged on October 29, 2026, holding its deposit rate at 2.5% as policymakers weighed rising energy costs against signs that underlying price pressures remained broadly stable. The decision left the bank without a commitment to either raise or lower rates at its next meeting, according to its policy statement.

The main refinancing rate remained at 2.65%, while the marginal lending rate stayed at 2.90%. The ECB said its medium-term inflation target remained 2%. It warned that a larger and more prolonged energy shock posed risks in two directions: stronger inflation and weaker economic growth. Those were the bank's assessment of risks, rather than a new set of numerical economic forecasts.

The decision followed a quarter-percentage-point increase in September, CNBC reported. Its coverage also described the bank's concern about energy prices, while noting that underlying inflation and wages had so far been broadly stable. In its own statement, the ECB said wages had not yet shown a material response to the energy shock.

Financing conditions had tightened since the previous meeting, according to the ECB, adding another influence on both growth and inflation. Separately from its interest-rate decision, the bank said its asset purchase program and pandemic emergency purchase program portfolios continued to shrink because principal payments from maturing securities were no longer being reinvested.

What to watch

• The ECB said future rate decisions will be made meeting by meeting, using incoming economic and financial data rather than a predetermined rate path.
• Policymakers said they will assess the inflation outlook, underlying inflation and how monetary policy is being transmitted through the economy.