The war in the Middle East has made the outlook significantly more uncertain, creating upside risks for inflation and downside risk for economic growth. We are determined to ensure inflation stabilizes at our 2% target. We will follow a data-dependent, meeting-by-meeting approach and are not pre-committing to a particular rate path.

The new ECB staff projections (cut-off March 11) show headline inflation revised up, especially for 2026, because energy prices will be higher owing to the war. Growth projections are revised down, especially for 2026, reflecting the war's effect on commodity markets, real incomes, and confidence.

We will be particularly attentive to developments in all commodity markets, supply bottlenecks, selling price expectations of firms, demand indicators, and wage trackers. The propagation of the shock—indirect and second-round effects—is what we need to anticipate.

Compared to 2022, we start from a better position: inflation at target, inflation expectations anchored, and interest rates broadly neutral. The labor market is solid but not as hot, and inflation expectations are informed by recent memory of high inflation.