- ECB’s Wojcik: Energy prices still very close to the baseline scenario
The ECB baseline scenario assumed that energy prices would rise in the short term, but that they would eventually stabilise. The ECB expects oil prices to reach around $90 a barrel in the second quarter of 2026 before gradually declining. In the unfavorable scenario, prices reached $119 per barrel, while in the worst case, oil is projected to rise to $145 per barrel and remain high.
Despite the rise in inflation, the ECB has maintained a patient approach to avoid overreacting to supply-side shocks, which are also likely to weigh on economic growth.
The ECB has clearly stated that it is not pre-committed to any specific rate path. Their response to the current baseline is characterized by neutrality and data-dependence. The central bank is willing to consider a temporary energy hike until they start raising wages and inflation expectations.
If the baseline holds, the ECB will keep rates unchanged for the foreseeable future. If adverse or severe scenarios emerge and core inflation begins to rise along with other data such as wages and inflation expectations, the ECB has signaled that it is well-positioned to act and increase interest rates to keep inflation around its 2% target.
