- 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 rising energy prices posed upside risks to inflation and downside risks to growth. The deposit rate had risen from 2.00% through 25-basis-point increases in June and September. The Eurosystem continued to reduce its asset purchase programme and pandemic emergency purchase programme portfolios at a measured, predictable pace, without reinvesting principal payments from maturing securities. Underlying inflation remained broadly stable and wages showed no material response to the energy shock so far, while tighter financing conditions were expected to weigh on inflation and growth. The increased magnitude and duration of the energy shock, including its indirect and second-round effects, were likely to push inflation higher and weaken growth. The ECB’s Governing Council reiterated its commitment to stabilising inflation at its 2% medium-term target and said decisions would remain data-dependent and meeting-by-meeting, without pre-committing to a rate path.
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 ECB 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, while reiterating its data-dependent, meeting-by-meeting approach with no pre-committed rate path. On 10 September 2026, the Governing Council raised the three key ECB 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. New European Central Bank staff projections put headline inflation at 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, with the 2027 and 2028 forecasts revised up from June, while the Governing Council said risks remained tilted to the upside for inflation and to the downside for growth and retained its data-dependent, meeting-by-meeting approach.