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Euro area · Central banks · Inflation & data · Source: European Central Bank
ECB keeps deposit rate at 2.5% as Lagarde says she will leave in February 2027
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Summary: The ECB kept borrowing costs on hold on 29 October 2026 while warning that the energy shock is pushing inflation risks higher. On the same day, the bank said Christine Lagarde will leave the presidency on 7 February 2027.
What happened
The Governing Council kept the deposit facility rate at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90%. It said it is not pre-committing to any rate path and will decide meeting by meeting.
In the monetary policy statement, the ECB said euro area inflation rose to 3.8% in September from 3.2% in August. Energy inflation climbed to 18.9%, and inflation excluding energy reached 2.3%. The ECB said underlying inflation had remained broadly stable so far and that wages showed no material response at this stage. Unemployment was 6.4% in August.
At the press conference, Lagarde said the Council had debated whether a hike was appropriate but decided unanimously to hold, CNBC reported. Reuters quoted her as saying: "The interim meeting period will be information-rich."
Separately, the ECB said Lagarde had told the Governing Council and European Council President António Costa that she will step down on 7 February 2027. Her successor will be appointed by the European Council under Article 283 of the Treaty on the Functioning of the European Union. Her term had been due to run until October 2027, according to the Guardian, which reported that she said she wanted freedom to speak on issues beyond monetary policy.
Background
The ECB raised rates in June, its first hike since 2023, and again in September, according to CNBC. CNBC linked the hikes to the jump in energy prices that followed the outbreak of the US-Israeli war with Iran in February. In its statement, the ECB said: "Financial conditions have tightened since our previous meeting." CNBC reported that Lagarde linked part of the rise in long-term yields to "debt issuance by some of the hyperscalers".
Why it matters for markets and crypto
ECB rates set the base cost of money in the euro area and feed into loan, mortgage and bond pricing. Shifts in central bank policy and leadership can change financial conditions across many asset classes, including digital assets. This is general background, not a view on any asset.
After the decision, money markets priced around a 67% chance of a December hike, according to CNBC citing LSEG data. That is market pricing, not ECB guidance. Reuters reported, citing unnamed sources at the meeting, that a December hike was seen as all but certain.
What to watch next
- 17 December 2026: the ECB's next monetary policy meeting and press conference, according to the ECB's published meeting calendar.
- 7 February 2027: Lagarde's departure date. She said "a process has already started to identify my successor", the Guardian reported.
Sources
- European Central Bank, "Monetary policy decisions", 29 October 2026
- European Central Bank, "Monetary policy statement", 29 October 2026
- European Central Bank, "ECB President Lagarde to step down on 7 February 2027", 29 October 2026
- CNBC, "European Central Bank keeps key interest rate on hold at 2.5%", 29 October 2026
- Reuters via Euronext, "ECB flags December hike but sees yield rise hitting growth", 29 October 2026
- The Guardian, "Europe's central bank chief, Christine Lagarde, steps down for 'freedom of speech'", 29 October 2026
- European Central Bank, "Meetings of the Governing Council and the General Council" (schedule, accessed 29 October 2026)
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