ECB leaves rates on hold, but keeps door open to further rate hikes

The Governing Council today decided to keep the three key ECB interest rates unchanged. The outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East. Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out. The Governing Council is therefore closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects. The Governing Council is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term. Ecb Interest Rate Decision (jul) Actual: 2.40% Vs 2.40% Previous; Forecast 2.40% Ecb Deposit Facility Rate (jul) Actual: 2.25% Vs 2.25% Previous; Forecast 2.25% Ecb Marginal Lending Facility Actual: 2.65% Vs 2.65% Previous; Forecast 2.65% ECB not pre-committing to a particular rate path ECB: Outlook for energy prices, while highly volatile, currently stands close to baseline of june Eurosystem staff projections and well above levels recorded prior to conflict in Middle East. ECB keeps interest rates on hold, avoids rattling markets The European Central Bank just decided to keep interest rates unchanged. Through the rearview mirror, this decision clearly makes sense. Headline inflation has actually come down, there are very few signs of knock-on effects from higher energy prices, and the eurozone economy has shown some resilience to the current oil price shock. It’s only survey-based inflation expectations that have gone up and will be a concern for the ECB. Looking ahead, however, the decision of whether to keep interest rates unchanged is not so straightforward. In fact, the latest increase in energy prices has actually pushed the ECB closer to its more severe macro scenarios, calling for another rate hike – at least when following the ECB’s own logic and reaction function, presented at the June meeting. Unless oil prices start dropping significantly over the next weeks, the ECB’s own macro projections in September will call for another rate hike, loud and clear. Against this background, the ECB could have also opted for a rate hike today, following a 'never put off until tomorrow what you can do today' principle. Instead, it seems the central bank got cold feet and didn’t want to break the well-established tradition of never surprising markets that has developed in recent years.

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ECB President Christine Lagarde explains the Governing Council's monetary policy decisions and answers questions from journalists at the Governing Council press conference held on Thursday, 23 July 2026 at 14:45 CEST in Frankfurt am Main.