"The war in the Middle East is generating inflationary pressures, and the decision to raise key rates is robust across a range of scenarios evaluating the possible evolution of the shock and its potential repercussions on the medium-term outlook for the euro area," the Council explained.

Compared with March's projections, Eurosystem staff have raised their baseline inflation projections for 2026 and 2027, due to a higher trajectory for energy prices, which is expected to feed through to some extent into higher prices for food, goods and services.

Consequently, headline inflation in the euro area is projected to average 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028. Regarding inflation excluding energy and food, the baseline scenario forecasts an average increase of 2.5% in 2026 and 2027 and 2.2% in 2028.

Furthermore, the ECB baseline scenario anticipates average economic growth in the euro area of 0.8% in 2026, 1.2% in 2027, and 1.5% in 2028. This represents a downward revision for 2026 and 2027, reflecting more pronounced effects of the war on commodity markets, real incomes and confidence.

With today's decision, the Council believes it "remains well positioned to deal with the uncertainty caused by the war." It will monitor the situation closely and follow a data-dependent approach to determine the appropriate monetary policy stance on a meeting-by-meeting basis.

In particular, its decisions regarding key rates will be based on its assessment of the inflation outlook and the surrounding risks. The Governing Council is not pre-committing to a specific rate path.