FX.co ★ ECB Holds Rates Amid Inflation and Growth Risks

The European Central Bank (ECB) kept interest rates unchanged at its October 2026 meeting, as widely anticipated, maintaining the main refinancing rate at 2.65% and the deposit facility rate at 2.50%. Policymakers opted for a wait-and-see stance in the face of rising inflation risks and weakening economic momentum. The ECB cautioned that persistently high energy prices could stoke inflation while simultaneously restraining economic activity, especially if indirect and second-round effects gain strength. Even so, underlying inflation remains broadly stable, and there has been no marked wage response to date. Although officials refrained from providing firm guidance on the future rate path, the ECB acknowledged that elevated borrowing costs across the euro area could further weigh on both growth and price pressures. The decision came just hours after reports that ECB President Christine Lagarde plans to step down ahead of schedule, raising the prospect of a significant leadership transition at a time of heightened volatility in French bond markets and sustained high energy prices.