The European Central Bank (ECB) has kept its three key interest rates unchanged following September's rate increase, with the deposit facility rate remaining at 2.5%, as policymakers assess renewed inflationary pressures and the impact of higher energy prices.

In a statement following the October 2026 ECB Governing Council monetary policy meeting, the Governor of the Central Bank of Malta endorsed the decision, citing heightened uncertainty over the inflation outlook and the need for a more comprehensive assessment of economic developments.

Headline inflation in September was higher than anticipated in the ECB's projections, largely because energy prices remained well above the levels assumed in the September projections. This is expected to prompt an upward revision to the inflation outlook.

The risks to inflation remain tilted to the upside, with the increased scale and duration of the energy price shock, together with the prospect of higher food inflation, raising concerns about indirect price pressures and possible second-round effects.

However, underlying inflation indicators suggest that these indirect effects remain limited and broadly in line with previous expectations. Wage developments across the euro area have also evolved largely as projected, with no visible signs so far of the second-round effects that are particularly important for monetary policy decisions.

At the same time, financing conditions have tightened somewhat since the previous Governing Council meeting. They could tighten further as earlier interest rate increases feed through to bank lending rates, while fiscal risks, particularly in member states facing upcoming elections, could add to the pressure.

Tighter financing conditions, as also reflected in the latest Bank Lending Survey, are expected to weigh on demand, potentially dampening both economic growth and inflation.

Against this backdrop, the Governor said it was appropriate to reassess the situation in December, when a more comprehensive analysis of the inflation outlook would be available.

The ECB will continue to adopt a data-dependent, meeting-by-meeting approach to monetary policy, with decisions guided by incoming economic and financial data.

The Governing Council remains committed to ensuring that inflation stabilises at its 2% medium-term target.