ECB Minutes Show Undershoot Worries Before Iran War

2026-03-05 12:59 By Agna Gabriel 1 min. read

The European Central Bank said policymakers expected inflation to drop further below their 2% target before the recent surge in energy prices linked to the Middle East conflict.

Minutes from the February 4–5 meeting showed officials were comfortable keeping interest rates unchanged and believed the overall outlook was stable, supported by the euro’s strength against the dollar.

At the time, inflation was projected to fall below target in the near term, though policymakers warned that volatile energy prices could quickly alter the outlook.

That risk has now become more visible after oil prices jumped more than 20% this week, which could push inflation higher in the short run since Europe relies heavily on imported energy.

Markets are now pricing in a small chance of a rate hike by December.

For now, the bank says its policy stance is appropriate, but it remains ready to adjust if inflation risks intensify.



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