ECB Raises Key Rate as Inflation Remains Above Target

The European Central Bank (ECB) has raised its key interest rate by 25 basis points, a decision made at the September policy meeting. According to ECB President Christine Lagarde, the economy is proving resilient and growth will persist into Q3.

Lagarde emphasized that manufacturing is solid, consumer confidence rebounded, and the services sector recovered. However, she also noted that employment gains are slowing down and exports face competitiveness challenges.

The ECB's guidance suggests that headline inflation will remain above target through the first half of 2027, with energy shocks feeding into core and food prices. Lagarde stated that 'headline inflation to return to target towards end of 2027.'