The European Central Bank left its policy rate unchanged at 2.5%, matching market expectations. ECB President Lagarde's early departure heightened market concern over energy costs and the situation in France. The ECB, which has hiked twice since the Iran war disrupted energy markets, opted to pause policy for now; officials warn inflation could rise to roughly twice the 2% target (c.4%) but say they have not yet seen oil and gas price increases spread broadly across the economy. Euro-area growth

The European Central Bank left its policy rate unchanged at 2.5%, matching market expectations. ECB President Lagarde's early departure heightened market concern over energy costs and the situation in France. The ECB, which has hiked twice since the Iran war disrupted energy markets, opted to pause policy for now; officials warn inflation could rise to roughly twice the 2% target (c.4%) but say they have not yet seen oil and gas price increases spread broadly across the economy. Euro-area growth momentum is weakening. Markets expect a further hike in December, when the ECB will publish updated forecasts to reassess inflation pressure; analysts view that as likely the final move in this cycle, while investors are pricing about two additional hikes in 2027. French developments have tightened financial conditions and are further weighing on demand.