European Central Bank President Christine Lagarde told the International Monetary Fund that the ECB will keep its rate hikes in place and does not plan a pause. The ECB has raised rates twice since June, by 0.25 percentage points each time, and has held the deposit rate at 2.50 percent since 16 September.
Lagarde described the energy shock as too large to ignore, while a measured response remains appropriate to keep inflation in check. The ECB sees no sign at this stage of significant spillover from energy into other prices and wages. Financing conditions have tightened, and long-term rates have risen markedly since the last meeting.
Inflation and growth outlook
Euro area inflation was 3.8 percent in September, while core inflation, which excludes the most volatile prices, was 2.5 percent. The September projections put euro area growth at 0.9 percent in 2026 and 1.4 percent in 2027.
The next ECB rate decision is on 29 October. The last meeting of the year is on 16 and 17 December.
Push for the digital euro
Lagarde called the digital euro an essential point and urged EU legislators to adopt the regulation by the end of 2026. The European Commission proposed the digital euro in June 2023. An internal pilot of one year is planned for the second half of 2027, conditional on that adoption.
The Pontes platform, which allows wholesale settlement in central bank money on distributed ledgers, went live on 21 September. The ECB has also flagged private credit, AI-related cyber risks and dependence on third-party providers as financial stability risks.
Related: RBI raises repo rate to 5.5 percent and signals more hikes · Sucor Asset Management sees Fed rate rise chance of 25 bps until end 2026
Source: European Central Bank
