The Governing Council today decided to lower the
three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit
facility rate – the rate through which the Governing Council steers the monetary policy stance – is based
on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength
of monetary policy transmission.
The disinflation process is well on track. Inflation has
continued to develop broadly as staff expected, and the latest projections closely align with the
previous inflation outlook. Staff now see headline inflation averaging 2.3% in 2025, 1.9% in 2026 and
2.0% in 2027. The upward revision in headline inflation for 2025 reflects stronger energy price dynamics.
For inflation excluding energy and food, staff project an average of 2.2% in 2025, 2.0% in 2026 and 1.9%
in 2027.