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ECB Lifts Inflation Projections for 2026, 2027 Amid Higher Energy Prices

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The European Central Bank on Thursday disclosed upwardly revised baseline inflation projections for 2026 and 2027 as the war in the Middle East fueled higher energy prices.

The baseline of the new Eurosystem staff projections expects average headline inflation of 3%, 2.3% and 2% in 2026, 2027 and 2028, respectively. Meanwhile, the average core inflation estimates were 2.5% in 2026 and 2027, and 2.2% in 2028.

In March 2026, headline inflation was expected to average 2.6%, 2% and 2.1% over the three-year period, while core inflation was estimated to average 2.3%, 2.2% and 2.1%.

For economic growth, ECB staff forecast an average of 0.8% in 2026, 1.2% in 2027 and 1.5% in 2028, mirroring a "more pronounced" war impact on commodity markets, real incomes and confidence. Previously, the estimates were 0.9%, 1.3% and 1.4%, respectively.

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