Eurozone inflation has fallen back to the ECB's target level, which supports policymakers' view that interest rates can stay at current levels unless there is a major change in the economic outlook. The consumer price index rose 2% year on year in December, down from 2.1% last month, in line with economists' expectations. Excluding volatile food and energy costs, the core inflation rate slowed to 2.3%, while much-publicized inflation in the service sector also declined somewhat. The price increase has been fluctuating around the 2% target for more than half a year, which has enabled the ECB to keep borrowing costs unchanged since June. Economists and investors expect no further action in the foreseeable future. Most policymakers agree that inflation is under control, but remain cautious about next steps, stressing that there is still uncertainty in the global economy. Other factors that may cause inflation to deviate from target include the ongoing impact of US tariffs, a strong euro, and Germany's fiscal expansion. Under the benchmark scenario, the central bank expects inflation to average 1.9% in 2026, then decline further and accelerate back to 2% again in 2028.

Eurozone inflation has fallen back to the ECB's target level, which supports policymakers' view that interest rates can stay at current levels unless there is a major change in the economic outlook. The consumer price index rose 2% year on year in December, down from 2.1% last month, in line with economists' expectations. Excluding volatile food and energy costs, the core inflation rate slowed to 2.3%, while much-publicized inflation in the service sector also declined somewhat. The price increase has been fluctuating around the 2% target for more than half a year, which has enabled the ECB to keep borrowing costs unchanged since June. Economists and investors expect no further action in the foreseeable future. Most policymakers agree that inflation is under control, but remain cautious about next steps, stressing that there is still uncertainty in the global economy. Other factors that may cause inflation to deviate from target include the ongoing impact of US tariffs, a strong euro, and Germany's fiscal expansion. Under the benchmark scenario, the central bank expects inflation to average 1.9% in 2026, then decline further and accelerate back to 2% again in 2028.