ECB Holds Rates at 2.5% as Lagarde Sets Feb. 7 Exit Date

The European Central Bank kept its deposit rate at 2.50% on Thursday, hours after President Christine Lagarde told policymakers she will step down on Feb. 7, 2027.

The hold comes with euro-area inflation at 3.8% in September, up from 3.2% in August, and energy inflation at 18.9%, the ECB's press conference statement shows. The dollar extended gains against the euro after the decision, CNBC reported.

Policymakers debated a hike

Lagarde told reporters that "the Governing Council debated whether a hike was appropriate" before voting unanimously to hold, according to CNBC. The bank's own release says it is "not pre-committing to a particular rate path." Its other two rates stay at 2.65% and 2.90%.

Money markets priced about a 67% chance of a December hike after the announcement, CNBC reported, citing LSEG data. Deutsche Bank economist Mark Wall expects one more increase, to 2.75%, in December. UBS's Dean Turner called Thursday's move "a hawkish pause rather than the end of the tightening cycle."

The European Council picks her successor

The next president will be appointed by the European Council under Article 283 of the EU treaty, the ECB said. Its release gives no reason for the timing and names no candidates.

Bitcoin was near $81,630 at 11:56 a.m. ET, up 1.5% in 24 hours, per CoinGecko.

In our opinion: December now carries two stories, a possible hike and a president with about two months left. The figure to check first is November's euro-area inflation reading.