ECB STATEMENT: Rates unchanged, as expected; says it is well positioned to navigate the current uncertainty

RATES:

GUIDANCE:

ECB not pre-committing to a particular rate path
Governing Council to follow data-dependent, meeting-by-meeting approach to policy stance
Interest rate decisions to be based on inflation outlook and risks, incoming economic and financial data, underlying inflation dynamics, and strength of monetary policy transmission
Governing Council stands ready to adjust all instruments within its mandate to ensure inflation stabilises at 2% in the medium term
Transmission Protection Instrument available to counter unwarranted, disorderly market dynamics that pose a serious threat to monetary policy transmission

INFLATION:

Upside risks to inflation have intensified
Euro area entered current period with inflation at around the 2% target
Shorter-horizon inflation expectations have moved up significantly
Longer-term inflation expectations remain well anchored
War in the Middle East has led to a sharp increase in energy prices, pushing up inflation
Longer the war continues and energy prices remain high, the stronger the likely impact on broader inflation

ECONOMY:

Downside risks to growth have intensified
War in the Middle East weighing on economic sentiment
Euro area economy has shown resilience over recent quarters
Implications of war for medium-term inflation and activity will depend on intensity and duration of energy price shock and scale of indirect and second-round effects

COMMENTARY:

Governing Council says incoming information broadly consistent with its previous assessment of the inflation outlook
Governing Council says it remains well positioned to navigate the current uncertainty