Euro area borrowing costs stayed where they were on 29 October. The European Central Bank held its deposit rate at 2.50%, its main refinancing rate at 2.65% and its marginal lending rate at 2.90%.
In its statement, the Governing Council pointed to energy prices, which it said keep rising. That, it said, adds to the risk of higher inflation and to the risk of slower growth. It also said financing conditions have tightened since its previous meeting, and that this is likely to weigh on both inflation and growth.
On the other side of the ledger, the council said underlying inflation has been broadly stable so far and that wages show no material response yet. It added that the “increased magnitude and duration of the energy shock” is likely to push inflation up and growth down.
The council gave no direction for its next meeting. It said it will decide meeting by meeting on the data and “is not pre-committing to a particular rate path”. Its judgement will turn on the inflation outlook, underlying inflation and how well rate changes pass through to the economy.
How this fits the recent rate path
The deposit rate was 2.00% from 11 June 2025. The ECB raised it to 2.25% on 17 June 2026 and to 2.50% on 16 September 2026, according to its published rate table. Thursday’s meeting was the first since the September increase, and the rates did not move.
Source: European Central Bank, key ECB interest rates, effective dates. Chart: Rand Desk
The bank also said the bond portfolios it built under its asset purchase and pandemic emergency purchase programmes are shrinking at a measured pace, because maturing securities are no longer replaced. It added that its Transmission Protection Instrument is available if disorderly market moves threaten the transmission of policy across the euro area.
The ECB’s inflation target is 2% over the medium term. The council said it stands ready to adjust all of its instruments to reach it.
Where South Africa comes in
The statement covers the euro area only. South Africa’s repo rate is 7.25% and prime is 10.75%, both unchanged since 25 September 2026. The Federal Reserve held at 3.75% to 4% on 28 October, as we reported in our Federal Reserve story. Our explainer on how the repo rate works sets out how the Reserve Bank makes its own decisions.
The ECB’s president, Christine Lagarde, was due to hold a press conference at 14:45 Central European Time on the day of the decision, which is 15:45 in South Africa. The Reserve Bank’s Monetary Policy Committee announces its next decision on 19 November.
