ECB Leaves Transmission Protection Instrument on the Shelf

Olli Rehn, a member of the European Central Bank's Governing Council, says there is no current need to deploy the Transmission Protection Instrument. The TPI was designed to prevent disorderly bond market conditions from undermining monetary policy across the eurozone. It has been sitting on the shelf since its creation in July 2022.

The ECB raised key interest rates by 25 basis points, bringing the deposit facility rate to 2.50% as of September 10, 2026. This move is part of a broader effort to combat inflation, which is projected to average 3.0% for 2026 and decline to 2.5% in 2027 and 2.1% in 2028.

Rehn emphasized that the ECB is not pre-committing to any specific policy path and will continue to make decisions based on macroeconomic indicators, such as inflation prints and employment data. The decision to leave the TPI dormant suggests that the ECB believes its rate hikes are transmitting cleanly across the eurozone.