The ECB kept its three key policy rates unchanged at 2.25%, 2.40%, and 2.65%, maintaining a data-dependent approach as it monitors the uncertain inflation effects of higher energy prices.

• The ECB left the deposit facility rate at 2.25%, the main refinancing operations rate at 2.40%, and the marginal lending facility rate at 2.65%, keeping its policy stance unchanged amid elevated uncertainty.

• The Governing Council said energy prices remain highly volatile but are currently close to the baseline assumptions in the June Eurosystem staff projections and well above levels seen before the conflict in the Middle East.

• The ECB stated that the full inflationary impact of the energy shock has yet to materialize and is closely monitoring the intensity and duration of the shock, along with any indirect and second-round effects on inflation.

• The Governing Council reiterated its commitment to ensuring inflation returns to its 2% medium-term target, indicating that price stability remains the primary objective of monetary policy.

• The ECB reaffirmed that future policy decisions will remain data dependent and taken on a meeting-by-meeting basis, with incoming economic data, the inflation outlook, underlying inflation dynamics, and monetary policy transmission all informing decisions.

• The Governing Council emphasized that it is not pre-committing to any particular interest rate path, maintaining flexibility as economic and inflation conditions evolve.

• Balance sheet normalization continues, with the APP and PEPP portfolios declining at a measured and predictable pace as the Eurosystem no longer reinvests principal payments from maturing securities.