The Governing Council of the European Central Bank (ECB) decided to keep all three key interest rates unchanged. It noted that recent economic data is broadly in line with previous expectations for inflation, but risks have increased: inflation risks are tilted to the upside, while growth risks are tilted to the downside. The ECB reiterated its commitment to ensuring inflation returns to and stabilises at its 2% medium-term target.
The ECB highlighted that the war in the Middle East has pushed energy prices higher, contributing to increased inflation and weaker economic sentiment. It warned that the longer the conflict and elevated energy prices persist, the greater the potential impact on inflation and economic activity, including secondary effects on the wider economy.
Despite this uncertainty, the euro area economy is described as resilient, and inflation expectations over the longer term remain anchored near the 2% target. However, short-term inflation expectations have risen significantly.
The Governing Council emphasised a data-dependent, meeting-by-meeting approach, stating it is not pre-committing to any specific interest rate path. Future decisions will depend on inflation outlooks, underlying inflation dynamics, financial and economic data, and the effectiveness of monetary policy transmission.
Key ECB interest rates remain unchanged:
- Deposit facility: 2.00%
- Main refinancing operations: 2.15%
- Marginal lending facility: 2.40%
Regarding asset purchases, the APP and PEPP portfolios continue to decline gradually as the ECB no longer reinvests maturing securities.
Finally, the ECB stated it remains ready to adjust all instruments if necessary to maintain price stability and ensure smooth transmission of monetary policy across the euro area. The Transmission Protection Instrument remains available to counter unjustified market disruptions.
The ECB President will present further details at a press conference at 14:45 CET.
