ECB holds rates at 2.50% on the day Lagarde says she will step down in February
The Governing Council left all three key rates unchanged and warned that rising energy prices raise inflation risks and weigh on growth. Earlier the same day, the ECB announced that its president will leave nine months before her term ends.
The European Central Bank left its three key interest rates unchanged on Thursday 29 October. In its monetary policy decision, the Governing Council kept the deposit facility rate at 2.50%, the main refinancing operations rate at 2.65% and the marginal lending facility rate at 2.90%.
A few hours earlier the ECB announced that President Christine Lagarde had informed the Governing Council and European Council President António Costa that she will step down on 7 February 2027. Her successor will be appointed by the European Council.
What the ECB decided
The decision was widely expected. In a preview published by Reuters on Thursday morning, the agency noted that the ECB has raised rates twice since June and was expected to hold this time, with investors focused on French government bonds and on Lagarde's future.
In its statement, the Governing Council said energy prices had continued to rise. It described this as an upside risk to the inflation outlook and a downside risk to growth. At the same time, it said underlying inflation had so far remained broadly stable and that wages had not yet shown a material response. It also said financing conditions had tightened since its previous meeting.
The central bank repeated that it will follow a data-dependent, meeting-by-meeting approach and is not pre-committing to a particular rate path. Its asset purchase portfolios (APP and PEPP) continue to shrink because maturing securities are no longer reinvested, and it said its Transmission Protection Instrument remains available to counter disorderly market dynamics.
Markets still expect more hikes
Reuters reported that money markets were pricing roughly three more quarter-point hikes by the end of 2027, which would take the deposit rate to 3.25%. It quoted Oliver Rakau of Oxford Economics as saying: "There is likely a low bar to another hike in December." The ECB itself gave no such signal and stressed that it is not committing in advance.
According to the ECB's meeting calendar, the next monetary policy meetings are on 16 and 17 December 2026 and on 3 and 4 February 2027. Both fall before the departure date Lagarde has given.
Lagarde's early departure
Lagarde's eight-year term was scheduled to run until the end of October 2027. Reuters reported that speculation about an early exit had been building for months, with the World Economic Forum seen as a likely destination. The ECB's own statement did not give a reason or name a next role.
The ECB said the Governing Council gave her a long standing ovation. Under Article 283 of the Treaty on the Functioning of the European Union, the next president is appointed by the European Council, acting by qualified majority on a recommendation from the Council, after consulting the European Parliament and the Governing Council.
Reuters' preview named former Dutch central bank governor Klaas Knot and former Spanish central bank governor Pablo Hernández de Cos as seen frontrunners. No candidate has been formally nominated, and the choice rests with EU leaders.
Why it matters for European founders and investors
For startups, the ECB rate is not an abstract number. It feeds into the cost of bank loans, venture debt and asset-backed credit lines, and it shapes how growth investors discount future revenue when they price late-stage rounds.
The ECB's own Survey on the Access to Finance of Enterprises, published on 26 October, showed that euro area firms reported a further net tightening of bank loan rates in the third quarter. A net 46% of firms reported higher bank loan interest rates, up from 42% in the previous quarter, and bank loan availability declined by more than firms' financing needs.
That matters most for companies that use debt to fund physical assets, inventory or rental fleets. On the same day as the ECB decision, Frankfurt-based StrollMe announced a €22 million round combining equity and a credit facility to expand its fleet. Founders planning similar structures should budget for financing costs that may rise further if the market's expectations prove right.
For investors, the leadership change adds a second layer of uncertainty to 2027. A new president could bring a different communication style or emphasis, although monetary policy is set by the full Governing Council, not by the president alone. For context on the German economy, see the latest ifo business climate and the government's autumn projection coverage.
What to watch next
Lagarde was due to explain the decision at a press conference at 14:45 CET. The next markers are the December meeting, when the ECB will also have fresh staff projections, and the European Council's process to choose her successor.
Irish broadcaster RTÉ and other outlets reported on the decision. Founders raising debt or planning a round in the first half of 2027 should watch both the rate path and the succession timetable, because either could move funding costs and investor sentiment.
Spotted an error? Email contact@europreneursmedia.com and we'll correct it. See our corrections policy and editorial standards.
