The external ECB Governing Council meeting took place on 9 and 10 September in Berlin. The agenda included monetary policy decisions and the release of new macroeconomic projections. The Governing Council usually meets in Frankfurt am Main. Once a year, one of the national central banks hosts the Governing Council meeting. This year, the Bundesbank hosted the meeting in Germany’s capital city. Alongside the monetary policy discussions, Governing Council members exchanged views with representatives from politics, business and civil society.

Key interest rates increased by 25 basis points

At the meeting, the Governing Council unanimously decided to raise the three key ECB interest rates by 25 basis points. Explaining the decision, ECB President Christine Lagarde noted, The conflict in the Middle East continues to generate inflation pressures. She highlighted that Today’s decision underscores the Governing Council’s commitment to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term.

Bundesbank President Joachim Nagel also supported the decision. When asked about future monetary policy decisions in an interview with CNBC, he emphasised that he could not rule out the need to enter mild restrictive territory. However, President Nagel added that this was very much dependent on how energy prices and the price picture evolve over the next month or so. He stressed that the Governing Council’s decisions would continue to depend on the available data and that it was still too early to speculate about further steps.

New macroeconomic projections: inflation remains a challenge

The Governing Council also published its updated macroeconomic projections at the meeting. They point to euro area inflation of 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. This means that inflation will remain above the target of 2% for longer than originally expected. At the same time, the euro area economy is proving resilient: economic growth is projected to be 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028.

In his interview with CNBC, President Nagel described it as good news that the economy was proving surprisingly robust despite the fallout from the Iran war. Germany’s economy, the largest in the euro area, could grow by around 1% this year.

Discussion with Federal President Frank-Walter Steinmeier and Federal Chancellor Friedrich Merz
On the sidelines of the ECB meeting, ECB President Christine Lagarde, Bundesbank President Joachim Nagel, Federal President Frank-Walter Steinmeier and the members of the ECB Governing Council attended a dinner. The discussion focused on the tense geopolitical situation, global competition and Europe’s role in artificial intelligence. 

In his speech, Federal President Frank-Walter Steinmeier highlighted the importance of the European idea as the basis for stability and progress. We are living in challenging times. To survive times like these, we Europeans need to call to mind our strengths. We depend on cooperation, reliability and trust, on the values which characterise us in Europe and which have made us what we are today, said Steinmeier. He emphasised that The European Central Bank, as a supranational institution, stands for a form of European integration that defies the zeitgeist of nationalism and protectionism. 

In her address, ECB President Christine Lagarde called for a further strengthening of European integration explaining that the challenges of our time had to be mastered together: The choice to build Europe is a difficult one. But it is far from impossible.

Bundesbank President Joachim Nagel also stressed the importance of joint European efforts. He emphasised, Our prosperity is no relic of past success that we can only preserve and administer. It is our launch pad for the future. [...] Europe, too, can renew itself. Our heritage is valuable because it gives us confidence, experience and a foundation on which to build. Let us use that foundation. Let us turn the scale of Europe into power to act. And let us ensure that the innovations shaping tomorrow also bear a European imprint.”

At a joint dinner for the Governing Council of the ECB, Nagel and Lagarde, as well as Federal Chancellor Friedrich Merz, who attended as a guest, also discussed the economic challenges facing Germany and the euro area.

The Bundesbank last hosted an external Governing Council meeting in 2011

The Governing Council’s external meetings make its work more visible in other euro area countries and enable it to engage with national political and economic representatives. The Bundesbank last hosted an external Governing Council meeting in 2011, also in Berlin.