The ECB Governing Council held its monetary policy meeting in Frankfurt on April 29-30, 2026, reviewing financial, economic, and monetary developments amid geopolitical tensions and energy price shocks.
The European Central Bank’s Governing Council convened in Frankfurt am Main on Wednesday and Thursday, 29-30 April 2026, to review recent financial, economic, and monetary developments.
Ms Schnabel reported that since the previous meeting in March 2026, euro area financial markets had been influenced by developments in the Middle East and energy prices. Market expectations for inflation increased, with risk asset prices remaining near all-time highs despite macroeconomic surprises and negative data in the euro area.
Energy prices remained volatile but unchanged from the previous meeting, with market assessments indicating persistent and large energy shocks. Inflation expectations for 2026 and 2027 had risen further, reflecting indirect and second-round effects, but longer-term expectations remained anchored around 2%.
Financial conditions had eased since March, driven by buoyant risk assets, but remained tighter than pre-war levels. Market pricing indicated about three 25 basis point rate hikes by the end of 2026, with a high probability of additional hikes.
The euro had recovered to pre-war levels against the US dollar, supported by global risk sentiment and expectations of tighter ECB monetary policy relative to the US. Equity markets in Europe and the US had partly recovered from initial declines, with US markets reaching new highs supported by artificial intelligence optimism.
Ms Schnabel also summarized the potential impact of tokenized financial markets, emphasizing the need for regulation and innovation to improve market functioning and monetary policy implementation.
Mr Lane discussed the global economic environment, noting that the war in the Middle East had increased energy prices and uncertainty, weighing on euro area growth prospects. Euro area inflation had risen to 3.0% in April, driven by energy prices, with risks skewed to the upside due to persistent shocks and supply chain constraints.
He highlighted that global activity remained resilient but was affected by energy market disruptions, with particular impacts on Asian economies. Oil and natural gas prices remained elevated, with the energy price shock expected to be persistent, influencing inflation and growth.
The euro appreciated against the US dollar since the previous meeting, and euro area economic activity showed signs of weakening, with survey data indicating declining confidence and softening growth momentum.
The Governing Council assessed that risks to inflation had increased, with upside risks from energy prices and second-round effects, while growth risks remained to the downside. The Council decided to keep the three key ECB interest rates unchanged, emphasizing a data-dependent approach and readiness to act if necessary.
The decision reflected the high uncertainty about the conflict’s duration and economic impact, with members agreeing that monetary policy should remain flexible and responsive to incoming data. The Council reaffirmed its commitment to ensuring inflation stabilizes at 2% in the medium term and will closely monitor developments, including in June projections.
The ECB’s next monetary policy account is scheduled for release on 9 July 2026.
