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The ECB’s March policy meeting was shaped by the Middle East crisis, which complicates the macro outlook. If the conflict persists, rate hikes cannot be ruled out, in an environment of elevated uncertainty and a firmly data-dependent policy stance.

In this publication you will find, on a weekly basis, our selection of the most relevant news regarding financial regulation.

Europe has managed to bring inflation back to the ECB’s target without triggering a recession, although the challenge now is to keep it there in an environment that is more exposed to global shocks.

Despite slightly higher growth and inflation forecasts, Lagarde struck a cautious tone, stressing high uncertainty and avoiding forward guidance. The ECB is watching services inflation and wages and starting to assess AI’s impact. Barring surprises, a prolonged pause with the deposit rate at 2% through 2027 looks likely.

The ECB's meeting held last Thursday put a lot of focus on issues that have little to do with monetary policy, which is symptomatic of the central bank's comfort with the current level of interest rates.

The ECB struck a more positive tone than in September, showing greater confidence in growth despite global uncertainty. It considers the 2% deposit rate appropriate and, unless incoming data materially change the outlook, appears ready to maintain its stance well into next year.

The ECB kept rates unchanged and, with Lagarde’s slightly hawkish tone, reinforced the view that current levels likely mark the end of the cycle. The new projections point to more balanced risks, supported by the US–EU trade agreement.