- The ECB sees headline inflation averaging 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028
- For inflation ex energy
Says
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Raises interest rate on deposit facility to 2.25% vs 2.00%
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Raises benchmark refi rate to 2.40% vs 2.15%
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Raises interest rate on marginal lending facility to 2.65% vs 2.40%
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Says that “in line with this commitment”, it today decided to raise three interest rates by 25 basis points
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War in Middle East is generating inflation pressures, and decision to raise rates is robust across a range of scenarios mapping out how shock might evolve and affect medium-term outlook for Euro area
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Eurosystem staff projections: headline inflation is expected to average 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028
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For inflation excluding energy and food, baseline foresees an average of 2.5% in 2026 and 2.2% in 2028
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Compared with March, staff have revised up their baseline projection for inflation in 2026 and 2027 owing to a higher path for energy prices, which, to some extent, is expected to feed into food, goods and services inflation
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Outlook remains uncertain, with upside risks for inflation and downside risks for economic growth
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This uncertainty is also reflected in broad range of outcomes for inflation and growth in updated illustrative scenarios put together by Eurosystem staff
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Says that with today’s decision, ECB remains well positioned to navigate uncertainty caused by war
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It will closely monitor situation and follow a data-dependent and meeting-by-meeting approach to determining appropriate monetary policy stance
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In particular, ECB’s interest rate decisions will be based on its assessment of inflation outlook and risks surrounding it, in light of incoming economic and financial data, as well as dynamics of underlying inflation and strength of monetar
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ECB is not pre-committing to a particular rate path
This was priced in but there is some slight euro selling and it’s down to the lows of the day.
This article was written by Adam Button at investinglive.com.
