The ECB left its deposit rate unchanged at 2.00%, in line with expectations, signaling continued confidence that current policy settings remain appropriate. With inflation broadly converging around target and growth improving, policymakers saw no need to adjust rates at this stage.
Updated Eurosystem staff projections show headline inflation averaging 2.1% in 2025, easing to 1.9% in 2026 and 1.8% in 2027, before returning to 2.0% in 2028. Core inflation excluding energy and food is projected at 2.4% in 2025, 2.2% in 2026, 1.9% in 2027 and 2.0% in 2028.
The inflation outlook for 2026 was revised higher, mainly reflecting expectations that services inflation will decline more slowly than previously anticipated.
On growth, projections were revised higher across the forecast horizon. GDP is now expected to expand by 1.4% in 2025, 1.2% in 2026 and 1.4% in 2027, with growth holding at 1.4% in 2028. The improvement is driven primarily by stronger domestic demand.
