In brief

• The ECB kept its deposit rate at 2.5%, ending a streak of two hikes from September.
• Inflation in the euro area rose to 3.8% from 3.2% in August, against the ECB's target of 2.0%.
• Economists expect another interest rate hike in December if inflation does not start to fall.
• ECB President Christine Lagarde announced she will leave her post early, in February.

Pause in hikes after two increases

The deposit rate, which matters for banks and savers, remains at 2.5%. The decision was made by the ECB Governing Council at its meeting at the central bank's headquarters in Frankfurt (Wirtschaft - EZB: Keine Zinserhöhung trotz steigender Inflation – Deutschlandfunk).

Inflation remains above target

The inflation rate in the euro area recently stood at 3.8%, compared with 3.2% in August (Europäische Zentralbank hält Leitzins unverändert – tagesschau.de). In the medium term, the ECB aims for inflation of 2.0%.. Crude oil and energy prices rose due to the war in Iran, which pushed up inflation (Geldpolitik: EZB lässt Leitzins trotz hoher Inflation vorerst stabil – DER SPIEGEL).

Expectations in financial markets

Economists expect another interest rate hike in December after the pause. In financial markets, a further step is considered likely if inflation does not start to fall.

Effects on loans and savers

Higher interest rates make loans more expensive for consumers and businesses, which may dampen demand and curb inflation. Savers benefit if banks pass higher interest rates on to their customers. At the same time, rising rates burden an already weak economy.

Lagarde's departure in focus

As tagesschau.de assesses, during the press conference after the decision, attention may focus less on the interest rates themselves and more on the early departure of ECB President Christine Lagarde.

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