Explained · 29 October 2026 rate decision
Why did the ECB leave interest rates unchanged while warning about inflation? 2026-11-03
On 29 October 2026 the ECB's Governing Council debated raising rates but unanimously chose to hold, citing rising uncertainty and broadly unchanged underlying inflation. ↗
At this meeting, the ECB said underlying inflation had remained broadly stable so far and that wages showed no material response at that stage. Energy prices were nevertheless continuing to rise, bringing risks of higher inflation and weaker growth. The full effects of the shock were still unfolding. ↗
The ECB's concern was that the energy shock could put more pressure on other prices and wages than expected. The longer energy stayed expensive, it warned, the more likely price rises were to spread more widely. ↗
For context, underlying inflation measures try to identify the more persistent, widespread movement in prices beneath volatile or temporary changes. Because that underlying trend cannot be observed directly, the ECB estimates it using several indicators. ↗
Financial conditions were also tightening. The ECB reported broadly higher interest rates and lower share prices since its previous meeting, and expected tighter financing to weigh on inflation and growth. ↗
The Council expected an information-rich period before its next meeting, including new staff projections and fresh readings on inflation and wages. ↗
The Council judged that it could wait for more information. The pause did not settle the next decision: the ECB had not committed to a particular rate path. ↗
The evidence behind this explanation Inspect the saved source passages below.
On 29 October 2026 the ECB's Governing Council debated raising rates but unanimously chose to hold, citing rising uncertainty and broadly unchanged underlying inflation. PRESS RELEASE Monetary policy decisions 29 October 2026 The Governing Council today decided to keep the three key ECB interest rates unchanged. Monetary policy decisions
the September projections. If you combine these two factors – actually, the Governing Council debated whether a hike was appropriate – but, on the basis Monetary policy statement (with Q&A)
of the uncertainty that accumulates and that rises as well, on the basis of underlying inflation that has broadly remained unchanged, the Governing Council unanimously Monetary policy statement (with Q&A)
decided that we were well positioned enough at this stage to hold, and that a measured approach, at this point in time, remained appropriate. Monetary policy statement (with Q&A)
At this meeting, the ECB said underlying inflation had remained broadly stable so far and that wages showed no material response at that stage. Energy prices have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook. Monetary policy decisions
While the full effects of the energy shock are still unfolding, underlying inflation has remained broadly stable so far and wages do not show a Monetary policy decisions
material response at this stage. The increased magnitude and duration of the energy shock, as well as the implications for indirect and second-round effects, are Monetary policy decisions
The ECB's concern was that the energy shock could put more pressure on other prices and wages than expected. The energy shock could intensify further and its effects on other prices and wages could be stronger than currently expected. Monetary policy statement (with Q&A)
The longer energy prices stay high, the more likely they are to drive up broader inflation through indirect and second-round effects. Monetary policy statement (with Q&A)
For context, underlying inflation measures try to identify the more persistent, widespread movement in prices beneath volatile or temporary changes. Underlying inflation measures should capture more persistent and generalised developments across prices, abstracting from volatile or idiosyncratic relative price movements, and thereby provide an informative Underlying inflation measures: an analytical guide for the euro area
of underlying inflation. Underlying inflation is unobservable, so the ECB hedges against this intrinsic uncertainty by monitoring a range of measures. Underlying inflation measures: an analytical guide for the euro area
[ 2 ] Underlying inflation is a theoretical concept and needs to be estimated. Underlying inflation measures: an analytical guide for the euro area
All the estimated measures seek to filter out the more transitory component of inflation and can be categorised into three broad estimation approaches. Underlying inflation measures: an analytical guide for the euro area
Financial conditions were also tightening. Financial and monetary conditions Financial conditions have tightened since our previous meeting. Interest rates have broadly moved up, while stock prices have fallen. Monetary policy statement (with Q&A)
Financing conditions have tightened since the Governing Council’s last meeting, which is likely to weigh on inflation and growth. Monetary policy decisions
The Council expected an information-rich period before its next meeting, including new staff projections and fresh readings on inflation and wages. There was a unanimous decision at the end of the discussion that we were in a sufficiently good position to actually wait for additional information, Monetary policy statement (with Q&A)
and the inter-meeting period will be information-rich. I'm going to take you through the list of what we're going to receive in the next few Monetary policy statement (with Q&A)
So, the list of information that we will have: A new set of staff projections – December will be a projection exercise. Monetary policy statement (with Q&A)
Two new inflation prints. Quarter three GDP. Q3 employment, compensation per employee and negotiated wages. Two unemployment readings. Two industrial production releases. The November PMIs. Monetary policy statement (with Q&A)
The Council judged that it could wait for more information. There was a unanimous decision at the end of the discussion that we were in a sufficiently good position to actually wait for additional information, Monetary policy statement (with Q&A)
and the inter-meeting period will be information-rich. I'm going to take you through the list of what we're going to receive in the next few Monetary policy statement (with Q&A)
The Governing Council is not pre-committing to a particular rate path. Monetary policy decisions