The ECB Held Rates Steady in July — But Left the Door Open for September

The European Central Bank left its three key interest rates unchanged on July 23, 2026, holding the deposit facility rate at 2.25%, the main refinancing rate at 2.40%, and the marginal lending rate at 2.65%. The decision was unanimous, according to President Christine Lagarde, even though some Governing Council members reportedly discussed whether a further hike was warranted.

Euro area inflation cooled to 2.8% in June, down from 3.2% in May, as energy price inflation eased from 10.8% to 8.5%. But the ECB says the energy shock tied to the Middle East conflict has not fully worked its way through the economy, and it expects inflation to stay above its 2% target into the first half of 2027 before declining.

The Bank is taking a meeting-by-meeting, data-dependent approach rather than committing to a rate path. Markets are now watching the September 10 meeting as the next point where a hike could be back on the table, given the ECB's stated concern that the inflationary impact of the energy shock has yet to fully play out.