Will the ECB announce a 25 bps increase at the October 2026 meeting?

Analysis

The ECB's deposit facility rate has stood at 2.50% since 16 September 2026, after the Governing Council raised all three key rates by 25 basis points on 10 September. Rates had been held at 2.25% in July. The question is whether it goes again at the meeting scheduled for 28 and 29 October. The forecast leans against that. The case for another hike is real. Headline inflation rose to 3.3% in August from 2.9% in July, and the ECB's own record says shorter-term inflation expectations remain elevated. A central bank that has just turned hawkish can keep going. But the ECB's own projections point the other way. September staff projections have headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Inflation excluding energy and food is seen at 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028. Most measures of longer-term expectations sit around 2%, which the ECB says supports inflation stabilising around target in the medium term. That reads like a bank that has made its move and now wants to watch the data. A second hike six weeks after the first would need a clear deterioration. The supplied research doesn't show one yet. This is a lean, not a certainty, since a 3.3% print is hard to wave away. The thing to watch is the next euro area inflation reading before the October meeting. If the August jump keeps climbing, and especially if core inflation moves above the ECB's projections, a second 25 basis point hike becomes much more plausible.