- Decision
- Maintain
- Rate change
- 0 bps
- deposit facility rate
- 2.5%
The European Central Bank (ECB) held its deposit facility, main refinancing operations and marginal lending facility rates at 2.50%, 2.65% and 2.90%, respectively, as a prolonged energy shock posed upside risks to inflation and downside risks to growth, while financing conditions tightened. The hold followed 25-basis-point increases in June and September 2026. The Eurosystem continued to reduce its asset purchase programme and pandemic emergency purchase programme portfolios by no longer reinvesting principal payments from maturing securities. Inflation rose to 3.8% in September and is expected to remain well above the ECB’s 2% medium-term target over coming quarters, although underlying inflation remained broadly stable and wage pressures moderate. Declining energy inflation and higher interest rates should subsequently support inflation’s return to target. Incoming data suggested continued economic expansion in the third quarter, supported by recovering services, technology-related investment and government spending, but higher energy prices and financing costs were expected to weigh on growth. Credit standards for business loans tightened in the third quarter. The Middle East conflict and developments in Russia’s war against Ukraine remained key sources of upside inflation and downside growth risks. The Governing Council retained its data-dependent, meeting-by-meeting approach without pre-committing to a rate path and stood ready to adjust its instruments to stabilise inflation at target and preserve monetary policy transmission.
Rate evolution
From June 2025 to April 2026, the European Central Bank cut the deposit facility rate by 25 basis points to 2.00% in June and then held it unchanged, with the easing based on a better inflation outlook, moderating underlying inflation and wage growth, and effective monetary transmission, as inflation was around target and worries that trade tensions would tighten financing conditions had eased. Later holds reflected inflation staying at or near 2%, easing domestic price pressures and labour costs, anchored longer-term inflation expectations, and an economy that remained resilient thanks to the labour market, solid private sector balance sheets, easier financing conditions and, by December, stronger domestic demand, even as trade disputes, geopolitics and the stronger euro kept uncertainty elevated.
In subsequent decisions, the Governing Council again left rates unchanged but warned that the war in the Middle East had sharply raised energy prices, intensifying upside risks to inflation and downside risks to growth, before raising the three key interest rates by 25 basis points on 11 June 2026, lifting the deposit facility rate to 2.25% as it judged that the war was generating inflation pressures. On 23 July 2026, it held the deposit facility rate at 2.25% and said energy prices remained highly volatile and well above pre-conflict levels, uncertainty was high and the full inflationary impact of the shock had yet to play out. On 10 September 2026, the Governing Council raised the three key interest rates by a further 25 basis points, taking the deposit facility rate to 2.50% with effect from 16 September, as the conflict continued to generate inflation pressures and inflation was set to remain well above target for an extended period.
On 29 October 2026, it held the deposit facility rate at 2.50%, noting that rising energy prices posed upside risks to inflation and downside risks to growth, while underlying inflation remained broadly stable, wages had not yet shown a material response and tighter financing conditions were likely to weigh on inflation and growth, while retaining its data-dependent, meeting-by-meeting approach without pre-committing to a rate path.