ECB STATEMENT: Rates hiked by 25bps; deposit facility to 2.25%, main refinancing operations to 2.40%, marginal lending facility to 2.65%

GUIDANCE:

ECB not pre-committing to a particular rate path
ECB to follow a data-dependent, meeting-by-meeting approach
Rate decisions to be based on inflation outlook, underlying inflation dynamics and strength of monetary policy transmission
Decision to raise rates judged robust across a range of scenarios for how the war shock might evolve
ECB says it remains well positioned to navigate uncertainty caused by the war
APP and PEPP portfolios declining at a measured and predictable pace, with no reinvestment of maturing securities
Transmission Protection Instrument remains available to counter disorderly market dynamics
ECB stands ready to adjust all instruments within its mandate

INFLATION:

War in the Middle East generating inflation pressures
Upside risks to inflation outlook
Baseline inflation revised up for 2026 and 2027 owing to a higher energy price path
Higher energy prices expected to feed into food, goods and services inflation

ECONOMY:

Downside risks to economic growth
Growth baseline revised down for 2026 and 2027
Revision reflects more pronounced war impact on commodity markets, real incomes and confidence
Outlook remains uncertain

FORECASTS:

Headline inflation seen averaging 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028
Inflation excluding energy and food seen at 2.5% in 2026 and 2027 and 2.2% in 2028
GDP growth seen at 0.8% in 2026, 1.2% in 2027 and 1.5% in 2028