European Central Bank (ECB) Monetary Policy Decision summary

Monetary policy decisions and outlook

• Key ECB interest rates remain unchanged, with deposit facility at 2.00%, main refinancing at 2.15%, and marginal lending at 2.40%; the decision was unanimous and all options remain open with a data-dependent, meeting-by-meeting approach.

• No forward guidance or pre-commitment to a rate path due to high uncertainty; all rate options remain on the table.

• No discussion of rate cuts or hikes took place at the meeting.

Inflation and growth projections

• Headline inflation is projected to average 2.1% in 2025, 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028; inflation excluding energy and food is expected to average 2.4% in 2025 and decline to 2.0% by 2028.

• Inflation for 2026 was revised up due to slower decline in services inflation, mainly driven by higher-than-expected wage growth.

• Economic growth projections have been revised up, with GDP growth expected at 1.4% in 2025, 1.2% in 2026, and 1.4% in 2027 and 2028.

Economic drivers and risks

• Domestic demand, rising real incomes, and government investment are expected to drive growth, while global trade remains a drag.

• Labor market remains robust, with unemployment at 6.4% and employment growth at 0.2% in Q3.

• Uncertainty remains high due to geopolitical tensions, global trade shifts, and financial market volatility.

• Upside risks to growth include increased defense and infrastructure spending and productivity gains from AI; downside risks stem from global shocks and trade disruptions.