ECB keeps interest rates unchanged as energy costs cloud outlook

The European Central Bank left its main interest rates unchanged on 29 October 2026, as policymakers weighed the uncertain consequences of higher energy prices for the euro-area economy. The deposit facility rate remains at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90%. The decision does not mean the bank considers inflation risks resolved. In its announcement, the Governing Council said rising energy costs could raise inflation while weakening economic activity. It also noted that financial conditions had tightened since its previous meeting.

The ECB continues to aim for inflation of 2% over the medium term. It said underlying inflation had remained broadly stable and that wages had not yet shown a material response to the energy shock. But policymakers cautioned that the scale and duration of the shock, including indirect effects on prices, could change the outlook. They will assess new economic and financial information before each future decision rather than promise a fixed path for borrowing costs.

The bank also confirmed that its asset-purchase portfolios are gradually shrinking as maturing securities are no longer reinvested. It said its policy tools remain available if disruption threatens the transmission of monetary policy across the euro area. The immediate message to households, companies and financial markets is one of caution: borrowing benchmarks are unchanged, but officials are monitoring the balance between price stability and weaker growth.