Rates stay unchanged as energy shock raises inflation risks

The Governing Council said energy prices continued to rise, increasing upside risks to inflation and downside risks to growth.

The shock has grown in magnitude and duration, with its full effects still unfolding.

Underlying inflation has remained broadly stable, and wages have not shown a material response so far.

The Council nevertheless anticipates higher inflation and lower growth from the energy shock, including indirect and second-round effects.

Financing conditions have tightened since the previous meeting, which the Council anticipates will weigh on both inflation and growth.

It remains committed to stabilizing inflation at its 2 percent medium-term target and described itself as well positioned to navigate elevated uncertainty.

Decisions remain data-dependent and meeting-by-meeting, with no pre-commitment to a rate path.

The Council will assess the inflation outlook and risks using incoming economic and financial data, underlying inflation dynamics and monetary policy transmission.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios continue to decline at a measured, predictable pace.

The Eurosystem no longer reinvests principal payments from maturing securities.

The ECB President will explain the decisions at a press conference starting at 14:45 CET.