In brief
The European Central Bank will raise its main policy rate in December, the Saudi Press Agency reports, after twice raising rates this year to counter rising inflation and energy costs. The ECB will keep its deposit rate steady at 5.2% and aims for a 2.0% inflation target in the euro area by the medium term.
In Frankfurt, the European Central Bank (ECB) has announced plans to raise interest rates in December as part of its battle against inflation, according to the Saudi Press Agency.
The announcement comes as the ECB meets its mandate to maintain price stability—defined as inflation close to, but below, 2% over the medium term. The central bank’s latest statement, released on 3 November 2026, stated that the ECB will increase its main policy rate in December to curb the current surge in price levels.
The agency noted that the ECB has already raised rates twice this year in response to a steep rise in inflation and higher energy costs. In September the consumer price index in the euro area rose 8.3% from a year earlier, the highest level in three years.
Despite the planned hike, the ECB will keep its deposit rate unchanged at 5.2%. The deposit rate is a key lever that influences short‑term borrowing costs for banks and, through that channel, the broader economy.
According to the Saudi Press Agency, the ECB’s policy council will hold its next meeting on the 17th of the month. The council will decide whether to implement the December rate increase and to confirm the policy stance in the forthcoming session.
"Raising the main policy rate raises the cost of borrowing, which can dampen demand and help bring inflation down," the agency quoted the policy makers as saying. It added that such a measure also places a heavier debt load on investors, potentially slowing economic activity.
In a move to widen its policy toolkit, the ECB will continue to anchor its long‑term inflation objective at 2.0% for the 21‑country eurozone. The agency stressed that maintaining this target will require a calibrated approach that balances growth and price stability.
ECB’s Strategy Amidst Energy Price Pressures
The agency highlighted the role of energy price pressures in driving the current inflationary environment. It said that the ECB’s decision to raise rates is a response to “persistent upward pressure on the price of energy.”
Energy price fluctuations have been a major factor in the euro area’s inflation trajectory, and the ECB’s policy shift aims to mitigate the impact on households and businesses.
While the ECB will not lower the deposit rate, the agency reported that policy makers are monitoring the potential impact on the financial sector, as higher rates can increase the cost of servicing debt for banks and other borrowers.
Inflation Outlook and Intermediate Goals
The agency reiterated that the ECB’s medium‑term objective is to bring inflation close to, but below, 2%. It indicated that the bank will use its policy tools, including rate adjustments, to ensure that inflation does not re‑enter multi‑year high territory.
"The ECB is prepared to take further policy measures if the current inflation trend persistently exceeds the medium‑term build‑up," the agency reported. It further explained that the central bank will remain vigilant as it responds to new data on inflation and economic activity.
In summary, the Saudi Press Agency’s report outlines the ECB’s forthcoming June 2026 decision to raise the main policy rate in December, its intention to keep the deposit rate steady at 5.2%, and its broader goal to maintain an inflation rate close to but below 2% across 21 euro‑zone member states.
