"The ECB left key interest rates unchanged at its March meeting – as we expected."

"The ECB left key interest rates unchanged at its March meeting – as we expected. Nevertheless, the risk profile has recently shifted noticeably. Rising energy prices as a result of geopolitical tensions are increasing the pressure towards possible interest rate hikes, while interest rate cuts have lost much of the likelihood.

The ECB continues to signal that it will initially 'see through' short-term energy price shocks as external supply effects and keep interest rates stable. However, the development of inflation expectations remains decisive. If these become entrenched at an elevated level, the look-through approach will reach its limits – and the ECB would be forced to act.

The experience of 2022 is having an impact: reacting too late to rising inflation risks is to be avoided. Against this background, the ECB has adjusted its communication. It emphasises the upside risks to inflation and the downside risks to growth, while underlining its clear readiness to react."