The European Central Bank (ECB) is expected to leave rates unchanged in October. The rise in long-term yields since the last meeting could weigh on growth. Core inflation, which excludes food and energy, has remained contained between 2.4% and 2.7% since May, despite persistent geopolitical risk.
Our expectations:
- The deposit facility rate should remain unchanged at 2.50%.
- Christine Lagarde is likely to reiterate that risks to inflation are tilted to the upside and risks to growth to the downside, while highlighting the resilience of the European economy.
- On the tensions surrounding French debt, she will likely say the ECB is monitoring the situation closely, particularly with regard to monetary policy transmission. She should point to the Outright Monetary Transactions (OMT) program and the Transmission Protection Instrument (TPI), neither of which has ever been activated.
In conclusion
The ECB is expected to remain cautious and will probably refrain as usual, from providing guidance on the rate path. Higher long-term yields, tighter financial conditions and the second energy shock could weigh on demand, which reduces the need for further tightening.
Source: Bloomberg, figures as of October 25th 2026.
Completed 26/10/2026. This commentary is provided for information purposes only. The opinions expressed by Crédit Mutuel Asset Management are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. The information contained in this publication is based on sources we believe to be reliable. However, we do not guarantee its accuracy, completeness, validity, or relevance. Published by La Française Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. Crédit Mutuel Asset Management: 128 Boulevard Raspail, 75006 Paris is an asset management company approved by the Autorité des marchés financiers under n° GP 97 138 and registered with ORIAS (www.orias.fr) under no. 25003045 since 11/04/2025. Public Limited Company (Société Anonyme) with share capital of €3,871,680, RCS Paris n° 388 555 021, Crédit Mutuel Asset Management is a subsidiary of Groupe La Française, the asset management holding company of Crédit Mutuel Alliance Fédérale.
