Confirmed: ECB Accounts reveal growing concerns over upside inflation risks
작성자 Ghiles Guezout
수정됨: 9 Jul 2026
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The European Central Bank (ECB) released the accounts of its latest monetary policy meeting on Thursday, revealing growing concern among policymakers over persistent inflationary risks.
- European Central Bank policymakers unanimously view inflation risks as tilted to the upside.
- The accounts show inflation is expected to remain above target through the first half of 2027 despite projected monetary tightening.
- The ECB stresses that its communication should remain neutral, avoiding signals of either a hiking cycle or a one-off move.
The European Central Bank (ECB) released the accounts of its latest monetary policy meeting on Thursday, revealing growing concern among policymakers over persistent inflationary risks. The discussions show a consensus within the Governing Council that the risks surrounding the inflation outlook are skewed to the upside relative to the ECB staff's baseline projections.
The accounts indicate that headline inflation is expected to rise further over the summer and remain well above the 2% target through the first half of 2027. This outlook comes despite the projections already embedding almost three 25-basis-point interest rate hikes.
Policymakers also noted that the outlook could prove even more challenging if energy prices do not decline in line with futures market expectations. Under that scenario, above-target inflation would likely become considerably more persistent.
The discussions nevertheless suggest that Governing Council members expect the current energy shock to have a shorter-lived impact than the previous episode. However, they also warned that firms and workers are likely to react more quickly to rising prices this time, as inflation has become more prominent in economic decision-making.
The accounts further highlight that the tightening in financial conditions since the outbreak of the war has so far had only a limited dampening effect on the economy. At the same time, some members argued that the recent increase in long-term interest rates and tighter bank lending standards should gradually reduce credit demand, weigh on investment and weaken economic momentum.
Finally, policymakers agreed that the ECB should maintain neutral communication. They emphasized that it should neither suggest that the latest decision marks the beginning of a sequence of rate hikes nor imply that it is a one-off move.
The Euro (EUR) showed little immediate reaction to the release. EUR/USD continued to trade in positive territory on Thursday, gaining 0.16% on the day to trade near 1.1435 at the time of writing, suggesting that the main messages had already been largely priced in by market participants.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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