European Central Bank monetary policy meeting of April 29-30, 2026

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 mainly by developments in the Middle East and energy prices. Market expectations reflected persistent inflationary impacts from energy shocks, with inflation fixings for 2026 and 2027 rising further. Despite some easing, financial conditions remained tighter than pre-war levels.

Energy prices remained volatile, with oil prices affected by the potential reopening of the Strait of Hormuz. Market assessments indicated the shock was large and persistent, with energy prices above pre-war levels over the next two years. Equity markets and risk asset prices had recovered somewhat, supported by optimism about economic resilience and earnings expectations, while sovereign bond spreads narrowed.

Inflation expectations for the euro area had increased, with inflation fixings trading at levels up to 3.6% for 2026, suggesting expectations of more persistent inflation. Short-term market-based measures indicated upside risks, but longer-term expectations remained anchored around 2%. The euro appreciated against the US dollar, recovering from initial depreciation caused by the conflict.

Economic activity in the euro area showed signs of weakening, with softening in survey data and a slowdown in GDP growth. Uncertainty was high, and risks to growth were assessed as tilted to the downside, especially if energy disruptions persisted. Labour market conditions remained resilient but showed signs of moderation.

Fiscal policies were expected to be slightly more expansionary in 2026 due to modest energy price support measures. Structural reforms and energy transition initiatives were emphasized as vital to enhancing growth potential.

Financial conditions remained tighter, with rising borrowing costs and tighter credit standards for firms. The Governing Council proposed to keep the three key ECB interest rates unchanged, citing the need for further information on the impact of the energy shock and geopolitical developments before considering a rate adjustment.

The Council highlighted the importance of a data-dependent, meeting-by-meeting approach, emphasizing vigilance on second-round effects and inflation risks. Communication would stress the Council’s commitment to medium-term inflation stabilization at 2%, while avoiding indications of pre-commitment to rate paths.

The Governing Council finalized its monetary policy decisions, with the next account scheduled for release on 9 July 2026. The full statement and details are available at the official ECB website.