The Economics and Statistics Division maintains archives of previous publications for accountability purposes, but makes no updates to keep these documents current with the latest data revisions from Statistics Canada. As a result, information in older documents may not be accurate. Please exercise caution when referring to older documents. For the latest information and historical data, please contact the individual listed to the right.
<--- Return to Archive
For additional information relating to this article, please contact:
September 10, 2026EUROPEAN CENTRAL BANK MONETARY POLICY The European Central Bank (ECB) announced today that it would raise the three key ECB interest rates by 25 basis points. The interest rates on the deposit facility, main refinancing operations and the marginal lending facility will be at 2.50%, 2.65%, 2.90% respectively.
The European economy grew in Q2 of 2026, driven by contributions from AI-related activity in digital services, business investment, and exports. Manufacturing has held up with government investment in infrastructure and defence. Consumer confidence has improved, supporting the services sector’s recovery from the initial energy shock. Economic growth is expected to remain modest in the near future. The base line projection for economic growth has been revised up to 0.9% in 2026, 1.4% in 2027, 1.5% in 2028 reflecting resilience of the euro area economy.
Labour market remained robust, with unemployment unchanged at 6.4% in July. Growth in employment and the labour force continues to slow, while productivity has gradually picked up.
Inflation increased to 3.3% in August, from 2.9% in July. Energy prices were up to 14.3% from 10.3% in July. Food price inflation was unchanged at 1.2% in August. Excluding food and energy, inflation eased to 2.4% in August, from 2.5% in July. The conflict in the Middle East is pushing up inflation pressure, and it is likely to remain above 2% target for an extended period. Inflation is projected to average 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028.
The outlook remains uncertain, with upside risks for inflation and downside risks for economic growth. The war in the Middle East adds significant volatility to the global policy environment. If prolonged, energy prices are expected to increase further and for longer. These factors would erode real incomes even more and make firms and households more reluctant to invest and spend. Additional frictions in international trade could also further disrupt supply chains, reduce exports and weaken consumption and investment. Extreme weather events, and the unfolding climate and nature crises more broadly, could drive up food prices by more than expected.
The asset purchase programme (APP) and Pandemic Emergency Purchase Programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests principal payments from maturing securities.
The Governing Council notes it is determined to see inflation stabilise at its 2.0% medium-term target. The Transmission Protection Instrument, an ECB backstop that allows targeted purchases of sovereign bonds when financing conditions diverge unjustifiably across member states, is also available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area.
Source: European Central Bank: Monetary policy decisions (Press Release); Monetary Policy Statement (Press Conference); Macroeconomic projections for the euro area, September 2026
<--- Return to Archive
