Monetary policy decisions

removed: The Governing Council today decided to keep the three key ECB interest rates unchanged. While the incoming information has been broadly consistent with the Governing Council’s previous assessment of the inflation outlook, the upside risks to inflation and the downside risks to growth have intensified. The Governing Council is committed to setting monetary policy to ensure that inflation stabilises at removed: the added: its 2% target in the medium term.

added: In line with this commitment, it today decided to raise the three key ECB interest rates by 25 basis points. The war in the Middle East removed: has led added: is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve and affect the medium-term outlook for the euro area.

added: In the baseline of the new Eurosystem staff projections, headline inflation is expected to average 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028. For inflation excluding energy and food, the baseline foresees an average of 2.5% in 2026 and 2027 and 2.2% in 2028. Compared with March, staff have revised up their baseline projection for inflation in 2026 and 2027 owing to a removed: sharp increase in added: higher path for energy prices, removed: pushing up added: which, to some extent, is expected to feed into food, goods and services inflation. The baseline sees economic growth at an average of 0.8% in 2026, 1.2% in 2027 and 1.5% in 2028. This is a downward revision for 2026 and 2027, reflecting a more pronounced impact of the war on commodity markets, real incomes and confidence.

added: The outlook remains uncertain, with upside risks for inflation and removed: weighing on added: downside risks for economic removed: sentiment. added: growth. The added: full implications of the war for medium-term inflation and removed: economic activity added: growth will depend on the intensity and duration of the energy price removed: shock and added: shock, as well as the scale of its indirect and second-round effects. removed: The longer added: This uncertainty is also reflected in the removed: war continues and the longer energy prices remain high, the stronger is the likely impact on broader added: broad range of outcomes for inflation and added: growth in the removed: economy. added: updated illustrative scenarios put together by Eurosystem staff. These will be published with the staff projections on the ECB’s website.

removed: The added: With today’s decision, the Governing Council remains well positioned to navigate the removed: current uncertainty. The euro area entered this period of surging energy prices with inflation at around added: uncertainty caused by the removed: 2% target, and the economy has shown resilience over recent quarters. Longer-term inflation expectations remain well anchored, although inflation expectations over shorter horizons have moved up significantly.

removed: The Governing Council added: war. It will closely monitor the situation and follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, removed: its added: the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

Key ECB interest rates

The added: Governing Council decided to raise the three key ECB interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will removed: remain unchanged at 2.00%, 2.15% added: be increased to 2.25%, 2.40% and removed: 2.40% respectively. added: 2.65% respectively, with effect from 17 June 2026.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

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The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2% target in the medium term and to preserve the smooth functioning of monetary policy transmission. Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:45 CET today.