Summary of ECB Conference - April 30, 2026

Key Policy Decisions

The European Central Bank (ECB) has decided to maintain its key policy rates, including the deposit rate at 2%. This decision aligns with market consensus and reflects the ECB's cautious stance amid rising risks to economic growth and inflation.

Remarks by ECB President Christine Lagarde

During the conference, President Lagarde highlighted several critical points:

• The incoming data remains consistent with the ECB's outlook, but risks to inflation and economic growth have significantly increased.
• Geopolitical tensions in the Middle East are contributing to rising energy prices and declining economic sentiment.
• The ECB will continue to adopt a data-dependent approach, evaluating conditions on a meeting-by-meeting basis without committing to a specific rate path.

Economic Context

Prior to the ongoing conflict in the Middle East, the European economy was showing signs of resilience, driven by strong domestic demand and a robust labor market. However, recent surveys indicate a decline in optimism, with growth slowing from 0.2% to 0.1% quarter-on-quarter. Business confidence is waning due to longer delivery times and rising input costs, while real incomes are decreasing due to higher energy prices, which may discourage consumption and investment in the long term.

Inflation Outlook

The prolonged conflict in the Middle East and the potential closure of the Strait of Hormuz could exacerbate the energy price shock, leading to second-round effects across various sectors and causing persistent inflation. Currently, long-term inflation expectations remain aligned with the ECB's target of 2%, although short-term inflation is expected to stay above this threshold.

Future Considerations

President Lagarde noted that the decision to hold rates was unanimous, but the Governing Council had extensive discussions regarding potential rate hikes. The primary rationale for maintaining the current rates was that the hard data aligns with the ECB's projections. Lagarde stated, "Given our position, six weeks is the right time to evaluate progress; we will release the updated scenarios in June."

Market Reactions

Following Lagarde's comments regarding discussions of rate hikes, the EUR/USD currency pair is attempting to recover above the 1.1700 level.