The European Central Bank held its deposit rate at 2.5%, in line with market
consensus. President Lagarde said she will leave in February next year, a
development that has added to market anxiety over rising energy costs and
instability in France. The ECB—after two consecutive hikes following
Iran-related energy shocks—said it is standing pat on borrowing costs; officials
remain wary inflation could reach roughly twice the 2% target but see limited
pass-through so far, with core inflation broadly stable and wages not yet
showing large moves. The bank also noted that an economy that had shown
surprising resilience is now showing signs of slowing.
