FRANKFURT: The European Central Bank (ECB) has raised its inflation outlook and lowered its economic growth expectations for 2026, warning that rising global energy prices could slow Europe’s fragile recovery.
The central bank said on Thursday that inflation is now expected to reach 3.0 percent under its baseline forecast, a sharp increase from the 2.6 percent projection made in March. The revision reflects growing concerns over prolonged energy market pressure linked to the disruption around the Strait of Hormuz, one of the world’s most important oil shipping routes.
The ECB also reduced its forecast for economic expansion, predicting that the eurozone economy will grow by 0.8 percent in 2026, slightly below its earlier estimate of 0.9 percent.
The updated figures highlight the difficult balance facing European policymakers. While inflation had been showing signs of easing after years of price shocks, renewed pressure from energy markets threatens to keep costs high for households and businesses.
The Strait of Hormuz crisis has raised fears of another wave of energy price increases, as global markets remain sensitive to disruptions in oil and gas supplies. Higher energy costs could affect everything from transportation and manufacturing to household bills, putting fresh pressure on consumers across Europe.
The ECB’s latest projections come at a challenging moment for the eurozone, where economic growth remains modest and businesses continue to navigate uncertainty. Policymakers are now watching closely whether the energy shock proves temporary or develops into a longer-lasting challenge.
The central bank’s revised outlook reflects a cautious message: Europe’s recovery is continuing, but the road ahead has become more uncertain. With inflation risks rising again, the ECB faces the difficult task of protecting price stability while supporting an economy still struggling to regain stronger momentum.
