BAKU, Azerbaijan, October 29. The European Central Bank (ECB) decided to keep its three key interest rates unchanged at its meeting on October 29, 2026.
This was announced by the ECB.
Under the decision, the interest rate on the deposit facility remains at 2.5%, the rate on the main refinancing operations at 2.65%, and the rate on the marginal lending facility at 2.9%.
According to the ECB, the continued rise in energy prices increases inflation risks and creates downside risks for the economic growth outlook. While the full impact of the energy shock has yet to materialize, core inflation has remained generally stable so far, and no significant changes in wages have been observed at this stage.
The bank believes that a more severe and prolonged energy shock, along with its indirect impacts and second-round effects, could lead to higher inflation and weaker economic growth.
Furthermore, financing conditions have tightened since the last meeting of the ECB’s Governing Council. This factor is expected to have a negative impact on both inflation and economic growth.
ECB prioritizes reaching 2% inflation target
The ECB’s Governing Council has expressed its commitment to adjusting monetary policy to ensure that inflation stabilizes at the 2% target level in the medium term.
The institution noted that, despite high levels of current uncertainty, there remains scope to make decisions appropriate to the situation. Future decisions regarding interest rates will be evaluated on a meeting-by-meeting basis and will be based on incoming economic and financial data.
In this process, consideration will be given to inflation outlooks and associated risks, the dynamics of core inflation, and the effectiveness of the monetary policy transmission mechanism. The ECB emphasized that it hasn’t made any pre-commitments regarding the future trajectory of interest rates.
Policy on asset purchase programs remains unchanged
According to the ECB, portfolios under the Asset Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP) are declining at a gradual and predictable pace. This is due to the non-reinvestment of principal payments from maturing securities.
The institution also expressed its readiness to utilize all available instruments within its mandate to maintain price stability and ensure the effective transmission of monetary policy to the economy.
Furthermore, the ECB’s Transmission Protection Instrument (TPI) can be deployed to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across individual eurozone countries.
