A steady rate decision is the market consensus ahead of the ECB’s Thursday meeting, with rising euro-area inflation and a Reuters report on Christine Lagarde adding scrutiny.
The ECB is due to announce its decision at 9:15 a.m. ET (13:15 UTC), followed by Lagarde’s news conference at 9:45 a.m. ET (13:45 UTC). Reuters reported that markets expected the deposit rate to remain at 2.50%. The forecast comes after the bank raised its three key rates by 25 basis points in June and September. The September move left the main refinancing rate at 2.65% and the marginal lending rate at 2.90%.
Eurostat’s flash estimate put annual euro-area inflation at 3.8% in September, compared with 3.2% in August. The annual energy inflation rate rose to 18.8% from 14.3%. The ECB’s medium-term inflation aim is 2%. The bank says it assesses incoming economic and financial information, underlying inflation and the effects of monetary policy when setting rates, without committing to a fixed path.
Reuters reported that money markets were pricing in three further rate increases by the end of 2027, which would take the deposit rate to 3.25%. The outlet also said a December increase remained possible. Those figures reflect market expectations, not ECB guidance.
French borrowing costs are also in focus. Agence France Trésor recorded a 4.94% reading for its TEC 10 measure on Oct. 28 and listed France’s negotiable debt at €2.896 trillion on Sept. 30. Reuters has reported that rising bond yields are increasing borrowing costs for governments, households and businesses. The ECB’s Transmission Protection Instrument, introduced in July 2022, is available for market dynamics judged unwarranted and disorderly when they pose a serious threat to monetary-policy transmission. Use depends on the Governing Council’s assessment and the instrument’s eligibility conditions.
Lagarde’s term as ECB president is scheduled to end Oct. 31, 2027. In an interview published by the ECB on Sept. 12, she said, “I will leave in 2027. I will say no more than that.” Reuters cited four people close to the World Economic Forum in reporting that the organization might name her as chair as soon as November. The outlet said no final decision had been made.
Eurostat’s next euro-area inflation release is scheduled for Nov. 4. The ECB’s next monetary-policy meeting is set for Dec. 17.
