ECB STATEMENT: Rates hiked by 25bps; deposit facility to 2.25%, main refinancing operations to 2.40%, marginal lending facility to 2.65%

GUIDANCE: ECB not pre-committing to a particular rate path ECB to follow a data-dependent, meeting-by-meeting approach Rate decisions to be based on inflation outlook, underlying inflation dynamics and strength of monetary policy transmission Decision to raise rates judged robust across a range of scenarios for how the war shock might evolve ECB says it remains well positioned to navigate uncertainty caused by the war APP and PEPP portfolios declining at a measured and predictable pace, with no reinvestment of maturing securities Transmission Protection Instrument remains available to counter disorderly market dynamics ECB stands ready to adjust all instruments within its mandate INFLATION: War in the Middle East generating inflation pressures Upside risks to inflation outlook Baseline inflation revised up for 2026 and 2027 owing to a higher energy price path Higher energy prices expected to feed into food, goods and services inflation ECONOMY: Downside risks to economic growth Growth baseline revised down for 2026 and 2027 Revision reflects more pronounced war impact on commodity markets, real incomes and confidence Outlook remains uncertain FORECASTS: Headline inflation seen averaging 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028 Inflation excluding energy and food seen at 2.5% in 2026 and 2027 and 2.2% in 2028 GDP growth seen at 0.8% in 2026, 1.2% in 2027 and 1.5% in 2028