European Central Bank monetary policy meeting of March 18-19, 2026

The European Central Bank’s Governing Council convened in Frankfurt am Main on Wednesday and Thursday, 18-19 March 2026, to review financial, economic, and monetary developments.

During the meeting, the Council discussed recent market reactions to geopolitical tensions, energy price shocks, and their impact on inflation and growth prospects. Market volatility had increased, with energy prices surging above USD 100 per barrel for Brent crude oil and natural gas prices rising significantly, though remaining below 2022 levels.

Financial markets showed heightened uncertainty, with euro area equity prices, exchange rates, and bond yields reacting strongly to the geopolitical developments. The euro depreciated against the US dollar, and risk premiums widened, reflecting deteriorating risk appetite.

Economic activity in the euro area had remained resilient, with GDP growth of 0.2% in Q4 2025, supported by domestic demand. However, the war in the Middle East was expected to dampen growth and increase inflationary pressures through higher energy prices. The staff projections revised growth down to 0.9% in 2026, with inflation expected to average 2.6% in 2026, above the target.

The Council discussed the risks to inflation and growth, emphasizing upside risks from prolonged energy supply disruptions and geopolitical tensions. The potential for second-round effects and the importance of monitoring inflation expectations and price-setting behavior were highlighted.

Given the increased uncertainty, the Governing Council decided to keep the three key ECB interest rates unchanged, maintaining flexibility to respond as new information becomes available. The decision aligns with a data-dependent, meeting-by-meeting approach, emphasizing the importance of close monitoring of incoming data and risks.

The Council reaffirmed its commitment to deliver 2% inflation over the medium term and to act decisively if risks to price stability materialize. It also highlighted the importance of transparent communication and the use of scenario analysis to navigate the uncertain environment.

The next account of monetary policy will be published on 28 May 2026.