29/10/2026 15:49:00

Governor’s Statement – October 2026 ECB Governing Council Monetary Policy Meeting

Today the Governing Council decided to keep the three key ECB interest rates unchanged after having raised them in September. Therefore, the interest rate on the deposit facility, which currently best reflects the monetary policy stance, remains at 2.5%.

The Monetary Policy Statement released by the ECB, together with the announcement of such decision, provides the motivations behind such decision.

As member of the Governing Council, I endorse the decision, with my personal assessment primarily based on the reasons outlined hereunder.

In September, headline inflation has been clearly pushed higher than that anticipated in the September projection exercise because energy prices were, and still are, well above the baseline of the September MPE.

Therefore, the outlook for headline inflation will likely be revised upwards based on the current information available. Despite this, risks to inflation remain on the upside because the increased magnitude and duration of the energy shock, coupled with an outlook of higher food inflation, increases the risk of indirect and second round effects.

However, the latest underlying inflation reading signals that indirect effects, so far, continue to be limited and broadly in line with the September MPE expectations. Wage developments in the euro area have also evolved broadly as expected in the MPE, while there are, to date, no visible signs of second round effects, which are key for monetary policy purposes.

At the same time, financing conditions have tightened somewhat since the previous Governing Council meeting, and could tighten further, as the previous rate hikes work their way through on bank lending rates, and could be further impacted by fiscal risks, especially in those Member States with impending electoral appointments. Tighter financing conditions, as also indicated in the latest Bank Lending Survey, are likely to weigh on demand and thus dampen both growth and inflation.

Therefore, in view of these marked movements, with contrasting implications for inflation, amidst elevated uncertainty, it is appropriate to reassess the situation in December when a more comprehensive and rigorous assessment would be available for the inflation outlook.

While the Governing Council will continue to follow a data-dependent and meeting-by-meeting approach, it remains committed to setting monetary policy that ensures inflation stabilises at 2% in the medium term.

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