European Central Bank to Announce Interest Rate Decision on October 29, 2026

Germany

The European Central Bank will hold a monetary policy meeting in Frankfurt, Germany, on October 28 and 29, 2026. According to the schedule, the 29th is the second day of the meeting, followed by a press conference. The monetary policy decision will be announced on this day, and the next monetary policy meeting is scheduled for December 16 and 17. The previous decision came on September 10. On that day, the ECB Governing Council raised its three key interest rates by 25 basis points each. The deposit facility rate was raised to 2.50 percent, the main refinancing operations rate to 2.65 percent, and the marginal lending facility rate to 2.90 percent, with the new rates taking effect on September 16.

The September decision cited inflationary pressures stemming from the Middle East conflict as the backdrop for the rate hike. The European Central Bank projected that inflation would remain significantly above its target for a considerable period. The bank reaffirmed its policy of setting interest rates to ensure that inflation stabilizes at its 2 percent medium-term target. Under the baseline scenario of the new staff projections, headline inflation was projected to average 3.0 percent in 2026, 2.5 percent in 2027, and 2.1 percent in 2028. Inflation excluding energy and food was projected at 2.5 percent in 2026, 2.6 percent in 2027, and 2.3 percent in 2028. Compared with the June projections, headline inflation for 2026 remained unchanged, while projections for 2027 and 2028 were revised upward.

Economic growth was projected at 0.9 percent in 2026, 1.4 percent in 2027, and 1.5 percent in 2028. The European Central Bank cited the euro area economy showing greater-than-expected resilience as the main reason for upward revisions to the 2026 and 2027 growth projections. It stated that uncertainty surrounding the outlook remains high, with upside risks to inflation and downside risks to economic growth. Regarding the energy shock, staff prepared updated scenarios illustrating how growth and inflation could evolve depending on assumptions about the magnitude, duration, indirect effects, and second-round effects of the shock. The wide range of scenarios highlights the weight energy prices carry in monetary policy deliberations.

The Governing Council stated that it is in a position to navigate the uncertainty created by the conflict. Its rate-setting approach follows a data-dependent, meeting-by-meeting approach. Interest rate decisions will be based on its assessment of the inflation outlook and surrounding risks in light of incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. The Governing Council affirmed that it is not pre-committing to a particular rate path. This wording indicates that the direction of the October 29 decision was not foreshadowed in the September statement. What will be confirmed in October is the new rate level, alongside how the inflation outlook and risk assessment have shifted since September.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measurable and predictable pace. The Eurosystem no longer reinvests the principal payments from maturing securities. The Governing Council stated that it stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilizes at its 2 percent target over the medium term and to preserve the smooth functioning of monetary policy transmission. The Transmission Protection Instrument (TPI) is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries. Mention of this instrument signifies that, separate from the level of policy rates, an excessive divergence of market rates across member states is treated as an issue of monetary policy transmission.

The European Central Bank schedule makes clear that monetary policy meetings take place over two days. October 28, 2026, marks the first day of the Frankfurt monetary policy meeting, and October 29 is the second day, followed by a press conference. The schedule then proceeds to a non-monetary policy meeting on November 25 and a General Council meeting on November 26, followed by a monetary policy meeting on December 16 and 17. In 2027, monetary policy meetings are scheduled for February 3 and 4, and March 17 and 18. The Governing Council usually meets twice a month and takes monetary policy decisions roughly every six weeks. Other meetings address tasks such as payment systems, financial stability, statistics, banknotes, legal matters, and banking supervision. October 29 corresponds to that six-week decision day.

The framework for the timing of the rate decision announcement is also established. The European Central Bank explains that monetary policy decisions are released via press release at 2:15 p.m. Central European Time on the day of the Governing Council's monetary policy meeting. The press conference, where the President and Vice-President explain the decision and answer journalists' questions, takes place following the meeting. The September 10 statement noted that the President would explain the considerations behind the decision at a press conference starting at 2:45 p.m. Central European Time that day. On October 29 as well, the structure involves releasing the statement and the press conference remarks together, with explanations on the growth and inflation outlook presented at the press conference. Since new staff projections are not issued at every monetary policy meeting, the wording of the risk assessment will be the primary reference point to check ahead of projection figures at the October meeting.

The accounts of the September meeting were published on October 8. The European Central Bank announced via its official account that it had published the accounts of the Governing Council's monetary policy meeting held on September 9 and 10, 2026. The accounts provide more detailed background on the discussions that led to the rate hike decision than the policy statement itself. Ahead of the October meeting, markets and the press review the accounts because they offer insight into the internal discussions revealing what inflation assessment motivated the rate hike decision. The policy statement provides the inflation outlook and risks, while the accounts outline the discussion process that led to that judgment. The direction of risks indicated by both documents forms the background for the October decision.

https://x.com/ecb/status/2108158473435291696

European Central Bank Chief Economist Philip Lane previously stated that the energy shock is a central issue for interest rate policy. The European Central Bank's official account reported on October 6, 2026, that Lane said that while the energy shock is a central issue for interest rate policy, its impact on growth and inflation must be viewed alongside other factors such as financing conditions, fiscal policy, and artificial intelligence. In other words, rates will not be determined based solely on energy prices. Chief Economist Lane drew the line that financing conditions, fiscal policy, and artificial intelligence must be considered together.

https://x.com/ecb/status/2107365351440646463

President Christine Lagarde stated in an International Monetary and Financial Committee statement on October 17 that the global economy has shown remarkable resilience despite uncertainties. The European Central Bank's official account reported that President Lagarde said returning to an international economic order based on openness, predictability, and the rule of law supports trade and investment. While these remarks do not foreshadow the rate decision itself, they were released as the President's assessment of the external environment surrounding monetary policy. When the September assessment that the Middle East conflict creates inflationary pressure is placed alongside the October remarks on global economic resilience, the October 29 decision emerges from an evaluation of both energy prices and international conditions.