The ECB Governing Council kept key interest rates unchanged at 2.25%, 2.40%, and 2.65% on 23 July 2026, citing persistent uncertainty from the Middle East conflict and its impact on energy prices. While energy inflation eased to 8.5% in June, inflation remained above the 2% target at 2.8%, with energy costs continuing to drive prices. Economic activity showed modest recovery in Q2 2026, supported by digital services and manufacturing, though labor market weakness persisted. The ECB emphasized a data-dependent approach to policy, avoiding pre-commitments to rate paths. Risks to growth include prolonged energy price volatility and geopolitical tensions, while inflationary pressures could persist through 2027. The council reiterated support for fiscal measures to address the energy shock, stressing temporary, targeted responses.
© European Central Bank, 2025.
Summary derived from the ECB website (https://www.ecb.europa.eu ).
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