ECB STATEMENT: STATEMENT: Rates unchanged, in a good place to navigate unccertainty

RATES: ECB Governing Council holds three key interest rates unchanged Deposit facility rate held at 2.00% Main refinancing operations rate held at 2.15% Marginal lending facility rate held at 2.40% GUIDANCE: ECB not pre-committing to a particular rate path Governing Council to follow data-dependent, meeting-by-meeting approach to policy stance Interest rate decisions to be based on inflation outlook and risks, incoming economic and financial data, underlying inflation dynamics, and strength of monetary policy transmission Governing Council stands ready to adjust all instruments within its mandate to ensure inflation stabilises at 2% in the medium term Transmission Protection Instrument available to counter unwarranted, disorderly market dynamics that pose a serious threat to monetary policy transmission INFLATION: Upside risks to inflation have intensified Euro area entered current period with inflation at around the 2% target Shorter-horizon inflation expectations have moved up significantly Longer-term inflation expectations remain well anchored War in the Middle East has led to a sharp increase in energy prices, pushing up inflation Longer the war continues and energy prices remain high, the stronger the likely impact on broader inflation ECONOMY: Downside risks to growth have intensified War in the Middle East weighing on economic sentiment Euro area economy has shown resilience over recent quarters Implications of war for medium-term inflation and activity will depend on intensity and duration of energy price shock and scale of indirect and second-round effects COMMENTARY: Governing Council says incoming information broadly consistent with its previous assessment of the inflation outlook Governing Council says it remains well positioned to navigate the current uncertainty