ROMA (ITALPRESS) – The Governing Council of the European Central Bank, at its meeting of 19 March 2026, decided to maintain unchanged the three reference interest rates, with the deposit rate remaining at 2,00%. Despite the determination to stabilize inflation on the target of 2% in the medium term, the ECB launches an alarm: the Middle East war has made the economic outlook “notely more uncertain”, generating risks to rise for prices and lowering for economic activity.
According to the new macroeconomic projections of ECB experts, GDP growth in the euro area has been reviewed at the bottom: it is now estimated an increase of 0.9% in 2026 (compared to 1.5% in 2025), 1.3% in 2027 and 1.4% in 2028. The slowdown reflects the impacts of conflict on commodity markets, real incomes and climate of confidence. On the other hand, overall inflation was revised up to 2026, averaging 2.6% (+0.7 percentage points compared to December estimates), due to the surge in energy prices. Inflation is expected to peak by 3.1% in the second quarter of 2026, then down to 2.0% in 2027.
“The Governing Council will follow a data-driven approach”, reads in the Bulletin, stressing that the decisions on rates will be adopted “from time to every meeting” without binding on a default path. The focus remains on the effects of “second impact” of energy shocks, which could make inflationary pressures more persistent in the medium term. On the front of public finances, the ECB expects an increase in the budget deficit in the euro area, which should rise from 3.1% of 2025 to 3.6% in 2027 and 2028.
The debt/GDP ratio is also expected to grow, from 87.5% to 89.5% in 2028. The Bank underlines the urgency of structural reforms and prudent fiscal management, warning that “any budgetary manoeuvre in response to energy shock should be temporary and targeted”. Finally, the Bulletin highlights a tightening of world financial conditions: stock markets have declined and market interest rates, especially in the short term, have increased considerably after the escalation of the conflict. In this context, the euro has depreciated both against the US dollar (-1.9%) and on a weighted basis for the exchange.
– Photo IPA Agency –
(ITALPRESS).
