ECB maintains interest rates amid inflation and geopolitical risks

Christine Lagarde, President of the ECB, and Luis de Guindos, Vice-President, announced that the Governing Council has decided to keep the three key ECB interest rates unchanged.

The decision reflects the current inflation outlook, which has risen to 3.0% in April, driven by surging energy prices due to the war in the Middle East. While inflation expectations remain anchored around 2%, short-term expectations have increased.

The ECB highlighted that upside risks to inflation and downside risks to growth have intensified. The war has led to higher energy prices, affecting economic sentiment and activity, with uncertainties about its duration and impact on supply chains.

The euro area economy showed a small growth of 0.1% in the first quarter of 2026. Domestic demand remains the main growth driver, supported by a resilient labor market, though confidence has declined since the conflict began. Unemployment was at 6.2% in March.

The ECB emphasized the importance of temporary, targeted fiscal responses to energy shocks, reforms to boost growth, and the adoption of the digital euro. It also noted that financial conditions remain tighter, with increased borrowing costs and credit standards tightening for firms.

The Governing Council reaffirmed its commitment to a data-dependent, meeting-by-meeting approach for monetary policy, with readiness to adjust instruments to ensure inflation stabilizes at the 2% target over the medium term.

Further information is available in the official press release on the ECB website.