ECB Raises Key Interest Rates Amid Ongoing Inflation Pressures
The European Central Bank (ECB) has raised its key interest rates by 25 basis points in response to ongoing inflation pressures. The conflict in the Middle East is expected to continue generating higher prices, and as a result, inflation will remain above target for an extended period.
The ECB staff projections indicate that headline inflation will average 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. The baseline projection for economic growth is 0.9% for 2026, 1.4% for 2027, and 1.5% for 2028.
The Governing Council has emphasized its commitment to setting monetary policy to ensure that inflation stabilizes at its 2% target in the medium term. The ECB will follow a data-dependent approach to determine the appropriate monetary policy stance, with interest rate decisions based on the assessment of the inflation outlook and associated risks.