ECB Raises Key Rates Amid Persistent Inflation Risks

European Central Bank (ECB) President Christine Lagarde emphasized resilient growth and robust labour markets in the Eurozone, despite persistent inflation risks. The ECB raised key rates by 25 basis points at its September policy meeting.

Lagarde highlighted resilient consumption, public investment, and a recovered services sector as contributing to the improved near-term outlook. However, she also underscored that headline inflation will remain above target through the first half of 2027, with energy shocks feeding into core and food prices.

The ECB's decision was seen as data-dependent, with Lagarde stating that the bank would follow a meeting-by-meeting approach to determining its monetary policy stance. She emphasized that the ECB is not pre-committing to a particular rate path and will adjust all instruments within its mandate to ensure inflation stabilizes at 2% in the medium term.

The ECB's interest rates on main refinancing operations, marginal lending facility, and deposit facility stood at 2.65%, 2.9%, and 2.5%, respectively. The bank's baseline projection for economic growth was 0.9% for 2026, 1.4% for 2027, and 1.5% for 2028.