European Central Bank monetary policy meeting of July 2026

The European Central Bank’s Governing Council held its monetary policy meeting in Frankfurt on Wednesday and Thursday, 22-23 July 2026. The meeting reviewed financial, economic, and monetary developments, including market reactions to geopolitical tensions and energy prices.

Ms Schnabel reported that since the June 2026 meeting, financial markets had been influenced by the Middle East conflict and developments in artificial intelligence. Oil prices remained volatile, with recent declines followed by rebounds, but levels stayed below pre-war peaks. Energy market disruptions, tight inventories, and constrained refining capacity contributed to elevated crack spreads and natural gas prices, with risks tilted to the upside.

Food prices had also increased, partly due to weather-related risks such as El Niño. The macroeconomic outlook had improved slightly, supported by resilient economic data and investor optimism around AI. Market-based inflation expectations remained broadly anchored around 2%, though risks to inflation were assessed as tilted to the upside.

In the euro area, economic activity showed signs of resilience despite geopolitical headwinds. The composite PMI indicated modest growth, supported by manufacturing and services sectors. Labour market conditions remained tight, with unemployment near historical lows, though job postings declined. Fiscal policies remained broadly unchanged, with some signs of a slightly more expansionary stance.

The Governing Council assessed that overall financial conditions had tightened slightly since June, consistent with previous rate hikes. Despite shocks, markets continued to function well, though vulnerabilities persisted, especially in technology stocks and leverage levels.

Members agreed to keep the three key ECB interest rates unchanged, citing high uncertainty and the need for further data. The September meeting would provide an opportunity for a comprehensive assessment of the inflation outlook, considering developments in energy prices, geopolitical tensions, and economic data.

The decision was based on the assessment that the current situation did not warrant immediate rate increases, but risks to inflation remained to the upside. The Governing Council emphasized a data-dependent, meeting-by-meeting approach, maintaining readiness to adjust policy as needed to ensure inflation stabilizes at 2% in the medium term.

The upcoming account of the meeting will be published on 8 October 2026.