Key facts
- ECB warned of upside risks to inflation and downside risks to growth from energy prices.
- ECB President Christine Lagarde announced she will step down early in February 2027.
- The central bank signaled that further rate hikes may be necessary in December.
- Underlying inflation and wage responses to higher prices remained stable, according to Lagarde.
The European Central Bank left interest rates unchanged on Thursday but maintained expectations for another hike in December, warning that high and rising energy costs were fuelling inflation risks. The decision came hours after ECB President Christine Lagarde announced she would step down early in February 2027. The bank stated that financing conditions have tightened since its last meeting, which is likely to weigh on inflation and growth. Lagarde noted that while underlying inflation and wage responses have remained stable, the increased magnitude and duration of the energy shock are expected to drive up inflation and undermine growth.