ECB maintains its rates as expected; says financing conditions have tightened since the Governing Council’s last meeting; committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term

• The Governing Council today decided to keep the three key ECB interest rates unchanged.
• The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will remain unchanged at 2.50%, 2.65% and 2.90% respectively.

• Energy prices have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook.
• While the full effects of the energy shock are still unfolding, underlying inflation has remained broadly stable so far and wages do not show a material response at this stage.
• The increased magnitude and duration of the energy shock, as well as the implications for indirect and second-round effects, are likely to drive up inflation and lower growth.
• Financing conditions have tightened since the Governing Council’s last meeting, which is likely to weigh on inflation and growth.
• The Governing Council is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term.

• The Governing Council remains well positioned to navigate the current elevated uncertainty.
• It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.
• In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission.
• The Governing Council is not pre-committing to a particular rate path.

• The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

• The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2% target in the medium term and to preserve the smooth functioning of monetary policy transmission.
• Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

A hold was fully priced, so the signal sits entirely in the statement language, and the notable element is the explicit acknowledgement that financing conditions have tightened between meetings: in past episodes that phrasing has functioned as the ECB's way of noting that part of the tightening work is being done by markets, which historically blunts the case for near-term hikes without committing to anything. The statement frames an energy supply shock, and the Council's own sequencing is the classic one: upside inflation risk against downside growth risk, with the policy response hinging on whether second-round effects appear in wages. On previous occasions of this kind the ECB has tolerated near-term overshoots so long as underlying inflation and wage settlements held, and the statement's observation that wages show no material response yet is the line that anchors the hold. The decision split worth drawing is between headline-driven inflation, which central banks in this position have tended to look through, and persistence in core, which they have not; the statement is calibrated to keep both options open via the meeting-by-meeting, no-precommitment formula. The follow-ons are the press conference emphasis on second-round effects, the next negotiated wage and underlying inflation prints, and any commentary on whether tighter financing conditions are substituting for policy action. QT continuing at a measured pace and the standing TPI reference are boilerplate carryover; fragmentation language only becomes live if peripheral spreads widen on the energy shock.