What changed in the European Central Bank statement — 23 July 2026

European Central Bank held policy at 2.25%. The ECB held rates after the previous hike, maintaining a data-dependent approach while underscoring persistent energy-driven inflation risks. This marks a pause in the tightening cycle, with the next decision contingent on inflation and growth data.

Decision

Decision: hold
Deposit facility rate: 2.25%

Going into the decision

On the day, the committee read as hawkish — 0.9 on a scale where +3 means every member wants higher rates and −3 means every member wants cuts.

Reconstructed from official member remarks published before the decision date. 18 of 27 active members had stored official remarks.

What changed

The ECB held rates after the previous hike, maintaining a data-dependent approach while underscoring persistent energy-driven inflation risks. This marks a pause in the tightening cycle, with the next decision contingent on inflation and growth data.

Inflation — Little changed. Both documents highlight persistent inflation risks from energy and second-round effects, with the current statement reiterating elevated energy prices and incomplete pass-through, no material directional change.
Labour Market — Little changed. Prior document described labour market as resilient with low unemployment; current document omits any labour market comment, implying no change in assessment.
Rate Path — More dovish. Shift from a 25bp hike in prior meeting to an unchanged rate in current meeting, alongside removal of downside growth risk language, signals a pause in the tightening cycle.
Balance Sheet — Little changed. Current document states QT continues passively at a measured pace, with no adjustment signaled; prior document had no explicit balance sheet passage, so stance unchanged.

Previous wording

we today decided to raise the three key ECB interest rates by 25 basis points.
rate path: Confirms tightening cycle continues.

We will closely monitor the situation and follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. We are not pre-committing to a particular rate path.
rate path: Open-ended guidance leaves market to price future moves.

Inflation rose to 3.2 per cent in May, from 3.0 per cent in April. ... services inflation increased from 3.0 per cent to 3.5 per cent.
inflation: Inflation and services inflation surprise to the upside.

In the baseline of the new Eurosystem staff projections, headline inflation is expected to average 3.0 per cent in 2026, 2.3 per cent in 2027 and 2.0 per cent in 2028.
inflation: Inflation seen gradually returning to target by 2028.

The risks to the growth outlook are to the downside, mainly owing to the war in the Middle East, which has added to the volatile global policy environment. Prolonged disruption of energy supplies could increase energy prices further and for longer than currently expected.
rate path: Downside growth risks highlighted; energy shock could worsen.

The labour market remains resilient. Unemployment, at 6.3 per cent in April, remains close to historical lows.
labour market: Labour market still tight, supporting wage pressures.

The outlook remains uncertain, with upside risks for inflation and downside risks for economic growth.
rate path: Explicit balance of risks – stagflationary tilt.

The longer energy prices stay high, the more likely they are to drive up broader inflation through indirect and second-round effects.
inflation: Warns of persistent second-round effects on core inflation.

Current wording

The Governing Council today decided to keep the three key ECB interest rates unchanged.
rate path: Rate decision: no change, as expected, but provides certainty on current stance.

In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.
rate path: Reiterates data-dependent approach and no forward guidance on future cuts or hikes.

The outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East.
inflation: Energy prices elevated relative to pre-conflict, sustaining inflationary pressures.

Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out.
inflation: Highlights upside inflation risk from incomplete pass-through, suggesting potential for further tightening if needed.

The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will remain unchanged at 2.25%, 2.40% and 2.65% respectively.
rate path: Specific levels confirm deposit rate at 2.25%, key for money market pricing.

The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
balance sheet: Quantitative tightening continues passively, but pace unchanged; no active adjustment signaled.

Official statement

Monetary policy decisions

23 July 2026

The Governing Council today decided to keep the three key ECB interest rates unchanged. The outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East. Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out. The Governing Council is therefore closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects. The Governing Council is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term.

With today’s decision, the Governing Council remains well positioned to navigate the uncertainty caused by the conflict. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

Key ECB interest rates

The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will remain unchanged at 2.25%, 2.40% and 2.65% respectively.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

***

The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2% target in the medium term and to preserve the smooth functioning of monetary policy transmission. Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:45 CET today.

Background reading

Cadence's comparison is generated from the official documents. Read the methodology.