ECB keeps key rates unchanged

October 29, 2026 (MLN): The European Central Bank (ECB) kept its three key interest rates unchanged on Thursday, saying the continued rise in energy prices has increased upside risks to inflation and downside risks to growth in the euro area.

The Governing Council left the deposit facility rate at 2.50%, the main refinancing operations rate at 2.65% and the marginal lending facility rate at 2.90%.

The bank said the full impact of the energy shock is yet to play out. So far, underlying inflation has stayed broadly steady and wage growth has shown no meaningful reaction, according to a press release issued by the bank.

However, the council noted that the larger size and longer duration of the shock, along with the possibility of indirect and second-round effects, are likely to push inflation higher and pull growth lower.

It added that financing conditions have tightened since its previous meeting, a development expected to weigh on both inflation and economic activity.

The council reiterated its commitment to steering policy so that inflation settles at its 2% target over the medium term.

It said it remains well placed to deal with the present high level of uncertainty, and will take decisions meeting by meeting based on incoming data.

Rate decisions will rest on its assessment of the inflation outlook and attendant risks, the behavior of underlying inflation and the strength of policy transmission. The bank said it is not tying itself to any particular rate path.

On its balance sheet, the ECB said the Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios continue to shrink at a measured and predictable pace, as the Eurosystem no longer reinvests principal from maturing securities.

The council said it is ready to adjust all its instruments, within its mandate, to bring inflation to target over the medium term and to safeguard the smooth transmission of monetary policy.

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