Looking further forward, the ECB is forecasting an inflation rate of just 1.6 per cent for 2026, meaning it would undershoot its medium-term inflation target of 2 per cent.

The European Central Bank cut interest rates for the eighth time in a year on Thursday, acknowledging inflation was under control and turning more pessimistic about economic prospects amid risks of a trade war with the United States.

Inflation at 1.6%; Prior Forecast 1.9% ECB Sees 2027 Inflation at 2%; Prior Forecast 2%