European Central Bank keeps key interest rate on hold at 2.5%
Officials said rising energy costs and tighter financing conditions could push inflation higher and slow euro area growth.
- The Governing Council held key interest rates steady on Thursday, maintaining the European Central Bank 's deposit facility rate at 2.50 per cent, the main refinancing operations rate at 2.65 per cent, and the marginal lending facility rate at 2.90 per cent.
- Rising energy prices prompted the ECB to warn that costs are "likely to drive up inflation and lower growth," as energy prices drove inflation to 3.8 per cent, almost double the bank's 2 per cent target.
- ECB President Christine Lagarde announced she will step down in February 2027, nine months before her eight-year term expires. "I leave this institution with a sense of a good work done," Lagarde said.
- French 10-year borrowing costs climbed above 5 per cent last week due to investor concerns, leading Dutch bank ING to note that rising bond yields effectively "have taken over the ECB's job."
- While the ECB reaffirmed its Transmission Protection Instrument is "available to counter unwarranted, disorderly market dynamics," it repeated it is "not pre-committing to a particular rate path," stating future decisions depend on incoming data.
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Following the example of the Fed, the ECB decided to maintain these rates. While the French debt is under pressure, the risk of contagion has reappeared, Christine Lagarde did not blow a word on the means that the monetary institution could use to defend the euro area. She leaves this burden to her successor.
The ECB KEPT interest rates at 2.5%, bringing temporary respite to Croatian citizens despite the risk of rising energy prices and further inflation.
The European Central Bank (ECB) decided on Thursday to maintain interest on the deposit facility at 2.5%, as expected by the markets, despite accelerating inflation in the euro area to the highest level in the last three years. The institution opted for a break after increasing interest by 0.25 percentage points in September, CNBC broadcasts.
The Governing Council warns of rising risks to inflation and downwards for growth and its second-round impact Lagarde announces that he will leave the ECB presidency in February 2027
The ECB is in difficult waters: inflation is almost twice as high as desired, and with France one of the most important euro countries is in crisis. In this situation, Lagarde acknowledges the service.
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