According to South Korea's Kyunghyang Shinmun, the ECB held its policy meeting in Frankfurt on the 29th and kept its main rates unchanged. The deposit rate is 2.50%, the main refinancing rate 2.65% and the marginal lending rate 2.90%. That is 1.25 to 1.50 points below the US Federal Reserve's 3.75 to 4.00%, which also held the day before.

In its statement the ECB said the full effects of the energy shock are still becoming visible. It judged underlying inflation broadly stable so far, with no clear response in wages. But given the size and duration of the shock and its indirect and second-round effects, it warned prices could rise and growth could slow.

A pause after two hikes

The ECB raised rates by 0.25 points in each of June and September after prices began climbing when the Iran war broke out in late February. Kyunghyang reported that eurozone consumer prices rose 3.8% year on year in September, the highest since September 2023 and well above the 2% target. This hold reads less as the end of the hiking cycle than as a wait-and-see move.

The outlook hinges on energy prices and how they pass through. Analysts say the key is whether price rises spread to wages and services, and some expect another hike in December if inflation broadens. The pledge the same day by twelve European countries to release strategic oil can be seen as one effort to cap energy costs and cut off that channel.

Taiwan's Liberty Times reported that European shares closed higher after the Fed and ECB both held rates the same day; the size of the index gain was not confirmed. South Korea's base rate is 3.00%, so by Kyunghyang's comparison the ECB deposit rate is 0.50 points lower.