European Central Bank keeps key interest rate on hold at 2.5%
Lagarde’s February exit adds a succession race as policymakers warn energy costs could lift inflation and slow 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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The President of the Bundesbank considers that a further increase in key rates will be difficult to avoid in order to counter inflationary risks linked in particular to energy prices.
ECB HOLDS RATES AT 2.5% — But the December Hike Threatening Your Wallet Is Already Priced In
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The European Central Bank is for the time being renouncing a further rise in interest rates despite a sharp rise in inflation.
Dnevni list Danas
The European Central Bank kept the benchmark interest rate unchanged at two and a half percent, but clearly hinted at a new increase in December, warning that high and rising energy costs fuel inflationary risks.
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