ECB Keeps Interest Rates On Hold, Avoids Rattling Markets

By Carsten Brzeski of Think.ING

Chief Economist at ING Germany • Jul 23, 2026 at 9:13 AM EDT

The European Central Bank held interest rates steady today but faces mounting pressure from surging energy prices.

depositphotos_95431504-stock-photo-eu-flags-in-front-of.jpg — Source: DepositPhotos

The ECB has kept interest rates on hold. Yet, with energy prices soaring, and assuming the June hike was not only an insurance move, a hike in September looks almost like a done deal

The European Central Bank just decided to keep interest rates unchanged. Through the rearview mirror, this decision clearly makes sense. Headline inflation has actually come down, there are very few signs of knock-on effects from higher energy prices, and the eurozone economy has shown some resilience to the current oil price shock. It’s only survey-based inflation expectations that have gone up and will be a concern for the ECB. Looking ahead, however, the decision of whether to keep interest rates unchanged is not so straightforward.

In fact, the latest increase in energy prices has actually pushed the ECB closer to its more severe macro scenarios, calling for another rate hike – at least when following the ECB’s own logic and reaction function, presented at the June meeting. Unless oil prices start dropping significantly over the next weeks, the ECB’s own macro projections in September will call for another rate hike, loud and clear. Against this background, the ECB could have also opted for a rate hike today, following a 'never put off until tomorrow what you can do today' principle. Instead, it seems the central bank got cold feet and didn’t want to break the well-established tradition of never surprising markets that has developed in recent years.

Let’s hear from ECB President Christine Lagarde at the press conference, starting at 2:45pm CET, to see what the official arguments for today’s decision were and whether she will give any hints at a rate hike in September.

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