ECB holds rate at 2.5% as Lagarde announces exit — SkimNews
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- European Central Bank held its deposit facility rate at 2.5% following September's 25 basis point hike, meeting market expectations amid rising inflation and energy price pressures.
- Christine Lagarde stated the Governing Council debated a rate hike due to higher energy and financing costs but opted to hold, citing unchanged underlying inflation and elevated uncertainty.
- Euro zone inflation reached 3.8% last month, the highest since September 2023, driven by an 18.8% surge in energy prices linked to Middle East conflict.
- Lagarde confirmed she will step down as ECB president, a decision announced the same day, introducing uncertainty about leadership continuity ahead of potential future rate moves.
- Money markets priced in a 67% chance of a December rate hike following the decision, according to LSEG data, reflecting expectations for one final tightening.
Why it matters: The ECB’s pause maintains pressure on borrowers facing rising sovereign yields, especially in France, while markets now anticipate one final hike. Lagarde’s impending departure adds institutional uncertainty just as energy-driven inflation risks test the bank’s commitment to price stability.
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