Frankfurt: The Governing Council left ECB interest rates unchanged on 29 October 2026, keeping the deposit facility rate at 2.50 percent, the main refinancing rate at 2.65 percent and the marginal lending rate at 2.90 percent. On the same day the bank announced that President Christine Lagarde will step down on 7 February 2027, about nine months before her eight-year term ends.

EUnews reports that the decision was unanimous after a discussion that included a possible rise, while Euronews gives no vote breakdown. Lagarde said the outcome does not preclude a future increase, and the next meeting is in December. The last move came with a 25 basis point increase in September.

Inflation explains the caution. Euro area headline inflation rose to 3.8 percent in September from 3.2 percent in August, and energy inflation climbed to 18.9 percent from 14.3 percent. The ECB statement said energy prices continued to rise, posing upside risks to the inflation outlook and downside risks to growth, and it noted that financing conditions have tightened.

The bank gave no commitment on the path of ECB interest rates. Lagarde urged temporary and targeted fiscal support for energy costs and told high-debt countries to prepare for higher rates. The Transmission Protection Instrument, which has never been used, remains available, and bond portfolios keep shrinking because maturing debt is not reinvested.

France is the pressure point for ECB interest rates. Euronews reports that the French ten-year yield stood near 5 percent, about 155 basis points above Germany, after crossing 5 percent for the first time since 2002 the week before. Moody’s kept France at Aa3 and put the outlook at negative. ING estimates that the rise in yields since September equals a 25 basis point hike in Germany and nearly 50 in France.

Lagarde gave no reason for leaving early. Euronews links the timing to France’s April 2027 presidential election, but that link is unconfirmed. It names Pablo Hernández de Cos and Klaas Knot as frontrunners to succeed her, and two more Executive Board seats, including chief economist Philip Lane’s, open in the first half of 2027.

The succession fight will therefore overlap with a difficult policy cycle. Governments must choose a leader while energy prices, bond spreads and inflation all point upward, and markets will read each appointment as a signal about the future course of ECB interest rates.

The December meeting will show whether the pause was a breather or the end of the tightening cycle. For borrowers and finance ministries alike, ECB interest rates now depend on energy prices as much as on Frankfurt’s own forecasts.