19.03.202613:23:05UTC+00ECB Holds Rates, Raises Inflation Forecasts

The European Central Bank left interest rates unchanged at its March 2026 meeting, reiterating its commitment to bringing inflation back to 2% over the medium term. The main refinancing rate remains at 2.15%, the deposit facility at 2.0%, and the marginal lending facility at 2.4%.

Policymakers emphasized that the war in the Middle East has significantly increased uncertainty, creating upside risks to inflation and downside risks to economic growth. In response to higher energy prices stemming from the conflict, the ECB raised its inflation projections, with the largest upward revision for 2026. Headline inflation is now forecast at 2.6% in 2026, 2.0% in 2027, and 2.1% in 2028.

Core inflation projections were also revised higher, while growth forecasts were lowered, particularly for 2026, as the war’s impact on commodity markets, real incomes, and business and consumer confidence weighs on the economy. The ECB now expects real GDP growth of 0.9% in 2026, 1.3% in 2027, and 1.4% in 2028.