On July 23, 2026, the Governing Council of the European Central Bank (ECB) announced that it will maintain the three key interest rates at their current levels. This decision comes as energy prices remain volatile but are close to the baseline projections made in June, and significantly higher than those prior to the recent Middle East conflict.
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The ECB recognizes the high uncertainty surrounding the situation and notes that the full effects of the energy shock on inflation have yet to materialize. Consequently, the Council is closely monitoring the duration and intensity of this shock, including its indirect and second-round impacts. The group remains committed to achieving an inflation rate of 2% in the medium term.
In light of the current circumstances, the Governing Council has adopted a data-dependent approach to monetary policy, making decisions on a meeting-by-meeting basis. Future interest rate decisions will depend on the evaluation of inflation prospects and associated risks, factoring in incoming economic and financial data, underlying inflation trends, and the effectiveness of monetary policy transmission. The Council is not binding itself to a specific interest rate trajectory.
The deposit facility rate, the main refinancing operations rate, and the marginal lending facility rate will remain unchanged at 2.25%, 2.40%, and 2.65%, respectively. Additionally, the asset purchase program (APP) and the pandemic emergency purchase program (PEPP) portfolios are set to decline at a predictable pace, as the Eurosystem will not be reinvesting principal payments from maturing securities.
The Governing Council is prepared to adjust its policies within its mandate to stabilize inflation at the 2% target and to maintain the smooth operation of monetary policy. Furthermore, the Transmission Protection Instrument is available to address any unwarranted market dynamics that threaten effective monetary policy transmission across the euro area. The President of the ECB will provide further insights into these decisions at a press conference scheduled for 14:45 CET today.