Key points ECB Rate decision
- The ECB held its deposit rate at 2.50% on 29 October, as widely expected, after hikes in June and September.
- Lagarde said policymakers debated a hike and that, barring major developments, the direction of travel is clear. That points to December.
- Hours before the meeting, Lagarde announced she will step down in February 2027, ahead of the end of her term.
- EUR/USD hit a 17-month low of 1.1105 on strong US data, then rebounded to about 1.1165 as the dollar sold off.
What happened
| Item | Detail |
|---|---|
| Deposit facility rate | 2.50% (unchanged) |
| Main refinancing / marginal lending rates | 2.65% / 2.90% (unchanged) |
| Eurozone inflation (September) | About 3.8%, a three-year high |
| Next decision | Thursday, 17 December 2026, with new projections |
| Leadership | Lagarde to step down in February 2027; she will chair the December and February meetings |
Key takeaways from Lagarde’s press conference
- A hike was debated, and December looks likely. Lagarde said the Governing Council discussed whether a hike was appropriate before agreeing to wait for more data. She called the period before December “information-rich” and said that, if the current picture is confirmed, the direction is clear. Reuters sources said a 17 December hike is now all but certain, with policymakers expecting to pause after that because borrowing costs have risen sharply.
- Energy is the main concern, but there’s no wage spiral yet. Lagarde pointed to two changes since September: higher energy costs, and a sharp rise in long-term financing costs, with the average 10-year euro area government bond yield up about 35 basis points. She said the ECB is not yet seeing second-round effects beyond what its September projections assumed. Bloomberg reported that she played down the risk of inflation spreading beyond energy.
- A message on French bonds. French government bond yields have climbed to their highest since 2002. The ECB said it has crisis-fighting tools to deal with “disorderly” markets. Lagarde also stressed that governments must follow EU fiscal rules to qualify for help under the Transmission Protection Instrument (TPI), and said bond yields are likely to stay high for heavily indebted eurozone members.
- Global long-term yields are rising. Lagarde linked the rise in long-term borrowing costs worldwide partly to expectations for inflation and rates, and partly to heavy long-term bond issuance by large AI “hyperscaler” companies.
Why it matters
A hawkish hold, with limits. The ECB signalled one more hike, but sources pointing to a pause afterwards suggest the cycle may end at 2.75%. Some analysts share that view. One expects one more hike to 2.75% in December while Lagarde is still President, probably ending the cycle.
Lagarde’s early exit adds uncertainty. Her departure in February 2027 lets European leaders pick a successor before France’s 2027 presidential election. Markets will watch who replaces her and whether the policy approach changes.
EUR/USD reaction
Before the ECB: Strong US data at 18:00 IST, with GDP at 3.4% and core PCE at 3.1%, lifted the dollar. EUR/USD fell to a 17-month low of 1.1105, its weakest since May 2025.
After the ECB: EUR/USD rebounded to about 1.1163–1.1167. Pound Sterling Live noted that the euro’s post-ECB jump was flattered by a broad dollar selloff. US yields slipped as PCE avoided an upside surprise, and an Alphabet-led tech sell-off triggered haven flows.
| Level | Price | Why it matters |
|---|---|---|
| Resistance | 1.1269 | A daily close above this would confirm a recovery |
| Resistance | 1.1200 | Psychological level; option expiries |
| Current | ~1.1165 | Thursday afternoon rebound |
| Support | 1.1105 | 17-month low (29 October) |
| Support | 1.1065 | CIBC’s downside target |
Possible scenarios:
- If eurozone data confirms rising inflation and French bond stress eases, EUR/USD may test 1.1200 and then 1.1269.
- If French yields keep rising or US data stays strong, a break below 1.1105 is likely to bring 1.1065 into focus.
Impact on Indian traders
EUR/INR: The ECB decision came after the NSE currency segment closed at 17:00 IST, so the reaction shows in Friday’s session. EUR/INR stood around 106.39 on 29 October. A hawkish ECB that supports the euro would lift EUR/INR, while renewed French stress would weigh on it.
EUR/USD on NSE: EUR/USD is available as an exchange-traded cross on NSE, alongside GBP/USD and USD/JPY. Indian traders can also use USD/INR, GBP/INR and JPY/INR. Trading forex with unauthorised offshore platforms is not permitted under FEMA.
French bond stress and rising global yields can trigger risk-off moves that affect emerging-market currencies, including the rupee. Our Risk-On / Risk-Off Meter can help you track those shifts.
What to watch next
| Date (IST) | Event | Why it matters for EUR/USD |
|---|---|---|
| Fri, 30 Oct | Eurozone Q3 GDP; Germany CPI and jobs data | Growth and inflation check |
| Tue–Wed, 3–4 Nov | US midterm elections | The dollar side of the pair |
| Early Nov | Eurozone October flash inflation | Key test for December |
| Fri, 6 Nov | US October jobs report | Fed December odds |
| Ongoing | French bond yields and the OAT–Bund spread | The main euro-specific risk |
| Tue–Wed, 8–9 Dec | FOMC | Fed hike widely priced |
| Thu, 17 Dec | ECB decision, with new projections | Expected hike to 2.75% |
Track all release times on our Economic Calendar, and find more coverage in Market Analysis & News. Related: ECB October 2026 preview, US GDP and PCE post
FAQs
What did the ECB decide in October 2026?
The ECB held its deposit rate at 2.50% on 29 October, as expected. Lagarde said a hike was debated and signalled one is likely in December.
Is Christine Lagarde leaving the ECB?
Yes. She announced on 29 October that she will step down in February 2027, before her term ends in October 2027. She will chair the December and February meetings.
How did EUR/USD react to the ECB decision?
EUR/USD fell to a 17-month low of 1.1105 on strong US data before the decision, then rebounded to about 1.1165 as the dollar sold off broadly.