The European Central Bank’s Governing Council has maintained key interest rates and monitors the impact of the Middle East conflict on inflation and growth, with decisions based on upcoming economic data.
The Governing Council of the European Central Bank (ECB) has decided to keep the three key interest rates unchanged: the deposit facility at 2.00%, the main refinancing operations at 2.15%, and the marginal lending facility at 2.40%. This decision aims to support the medium-term inflation target of 2%.
The Council highlighted increased uncertainty due to the war in the Middle East, which has led to higher energy prices and poses upside risks to inflation and downside risks to economic growth. The impact depends on the conflict’s duration and energy price effects on consumer prices and the economy.
ECB staff projections, updated to 11 March, forecast average inflation of 2.6% in 2026, 2.0% in 2027, and 2.1% in 2028, with higher inflation mainly driven by energy prices. Economic growth is projected at 0.9% in 2026, 1.3% in 2027, and 1.4% in 2028, with downward revisions especially for 2026 due to global effects of the conflict.
The ECB assessed alternative scenarios, including prolonged energy supply disruptions, which could lead to higher inflation and lower growth. The Council emphasized a data-dependent approach, with interest rate decisions based on inflation outlook, economic data, and transmission dynamics, without pre-committing to a specific rate path.
The asset purchase programmes (APP and PEPP) are gradually winding down as principal payments from maturing securities are no longer reinvested. The Governing Council remains ready to adjust all instruments within its mandate to ensure inflation stabilizes at 2% and to maintain effective monetary policy transmission. The Transmission Protection Instrument is available to counter disorderly market dynamics.
The ECB President will hold a press conference at 14:45 CET to discuss these decisions and considerations.
