The European Central Bank kept its three key interest rates unchanged on 29 October: the deposit facility rate at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90%. The pause follows two hikes in the past five months aimed at energy-driven inflation.
Energy is the issue
In its statement the ECB said that “energy prices have continued to rise”, creating upside risks to inflation and downside risks to growth, and that financing conditions have tightened. It stressed that it is “not pre-committing to a particular rate path”. Reporting by The Irish Times notes that euro area inflation could soon exceed 4%, and that markets still expect another hike in December.
A leadership change
The decision was overshadowed by Christine Lagarde’s announcement that she will leave the ECB presidency in February, nine months before her term ends. Klaas Knot and Pablo Hernández de Cos are seen as front-runners to succeed her. Executive Board member Isabel Schnabel is also leaving early, in January, for the IMF. Separately, a bond-market sell-off in France, linked to budget concerns, is adding to the strain.
Why it matters for leaders
The euro area is one of Georgia’s most important trading partners and a growing source of visitors. Slower European growth and higher euro rates affect export demand, tourism and the cost of euro financing for Georgian businesses.
Sources
- European Central Bank: Monetary policy decisions, 29 October 2026
- The Irish Times: ECB pauses rate hikes as Lagarde announces early exit
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