The European Central Bank is expected to raise rates by 25 basis points to 2.25% as it weighs second-round inflation risks from elevated energy prices.

Growth forecasts for 2026–2028 show a downshift this year and next, with 0.8% in 2026, 1.2% in 2027, and 1.5% in 2028 due to war-related pressures on commodities, real incomes, and confidence.

The move underscores the ECB’s mandate to balance inflation control with supporting activity amid subdued growth and external inflation pressures.

Markets showed sector-specific swings: financials and real estate dragged, while tech shares wobbled on cautious AI investment outlooks.

The update is ongoing and subject to change as new data arrives, with ongoing discussion about its economy and markets implications.

The developments reflect a mix of macro policy shifts and geopolitical risk shaping investor sentiment.

Lagarde signaled a consistent, data-dependent approach, suggesting further steps will follow the same logic rather than committing to automatic moves.

The IMF warns that confidence losses and financial tensions could dampen demand even if energy shocks ease, highlighting the need for monetary and fiscal coordination.

Additional details and context were provided later, with ongoing reporting.

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Markets have priced in the move, so focus shifts to the accompanying statement and updated staff projections to gauge path and risks.

Lagarde is expected to frame remarks to avoid panic over stagflation, emphasizing a cautious, flexible, data-driven stance rather than an “insurance hike.”