Euro Steadies Near $1.117 After ECB Holds Its Deposit Rate at 2.5% and Lagarde Says She Will Leave in February

The euro traded little changed against the U.S. dollar at midday on Thursday, October 29, 2026, after dipping following the European Central Bank's decision to keep interest rates on hold, on a day when ECB President Christine Lagarde confirmed she will leave the central bank early.

The rate decision

The ECB's Governing Council "today decided to keep the three key ECB interest rates unchanged," the central bank said in its monetary policy statement. The deposit facility rate, the main refinancing operations rate and the marginal lending facility rate remain at 2.50%, 2.65% and 2.90%, respectively.

The ECB said energy prices "have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook," while underlying inflation "has remained broadly stable so far and wages do not show a material response at this stage." It added that financing conditions have tightened since the previous meeting. The council said it will follow "a data-dependent and meeting-by-meeting approach" and "is not pre-committing to a particular rate path."

The hold followed a 25-basis-point increase in September, CNBC reported. Euro zone headline inflation reached 3.8% last month, the highest since September 2023, with energy price inflation at 18.8%, CNBC said. At her press conference, Lagarde said the Governing Council "debated whether a hike was appropriate" but "unanimously decided that we were well positioned enough at this stage to hold." Money markets priced around a 67% probability of a December hike after the announcement, according to LSEG data cited by CNBC.

Lagarde's early departure

Lagarde will step down on February 7, 2027; her term had been scheduled to run until the end of October 2027, Reuters reported in a story published by The Straits Times. "I leave this institution with a sense of good work done and an ECB that is fit for the future," Lagarde said in a short video shared on social media.

European Council President Antonio Costa said the process to find a successor would begin immediately, according to the report. The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are widely seen as frontrunners, Reuters said. BusinessDay, also carrying the Reuters report, said the appointment is likely to be part of a broader package of top ECB jobs, including the executive board seat of Isabel Schnabel, who will leave in early January, and that of chief economist Philip Lane, due to depart in May.

"The rumoured successors are both very competent, well-established central bankers, so for markets, it won't matter too much," Danske Bank economist Piet Haines Christiansen said, according to BusinessDay's version of the report.

How the euro traded

Ahead of the rate decision, the euro was down 0.1% at $1.1143 following the Lagarde announcement and was little changed from levels before it, German broadcaster n-tv reported. After the decision, the euro edged lower to $1.1125, having fallen almost 2% this month against the dollar and 2.5% against sterling, Reuters reported in a story carried by Euronext. Reuters also said data show investors have built up their biggest short position on the euro in a decade, totaling almost $19 billion.

By midday in New York the single currency had recovered. As of about 12:08 p.m. ET, according to Yahoo Finance quote data:

• EUR/USD was at 1.1168, up about 0.1% from the previous close of 1.1157, after a session low of 1.1114.
• GBP/USD was at 1.3376, up about 0.37%.
• EUR/GBP was at 0.8346, down about 0.26%.
• USD/JPY was at 157.84, little changed.
• The U.S. Dollar Index was at 101.998, down about 0.19%, as of 11:59 a.m. ET.

In the United States, the Commerce Department reported that the personal consumption expenditures price index rose 3.6% from a year earlier in September and that the economy grew at a 3.4% annualized pace in the third quarter, CNBC reported, a day after the Federal Reserve held its benchmark rate at 3.75% to 4%.

Bond markets in focus

Lagarde identified a sharp rise in long-term financing costs, with the average 10-year sovereign yield up by around 35 basis points, as one of the main developments since the ECB's last meeting, CNBC reported. She said the ECB would continue monitoring rising French borrowing costs. Money markets are pricing another three ECB rate increases by the end of next year, which would take the deposit rate to 3.25%, according to the Reuters report.

Currency prices are intraday figures and may change through the trading day.