Euro Area Economic Outlook and Monetary Policy Lecture

The economic outlook and monetary policy in the euro area

Lecture at University of Virginia Darden School of Business

Philip R. Lane14 April 2026Member of the Executive Board Monetary policy in the euro areawww.ecb.europa.eu © Rubric

Deposit facility rate (DFR) Asset side of the Eurosystem balance sheet (percentages per annum)

(EUR trillions)

APP & PEPP DFRLong-term credit operations (>3m)Short-term credit operations (<=3m)5Other assets10 4 8 3 6 2 41

Source: ECB.2Source: ECB. 0Notes: Short-term credit operations refer to three-month longer-term refinancing operations (LTROs) and main refinancing operations (MROs); long-term credit operations refer to LTROs with a maturity longer than three months, targeted longer-term refinancing operations (TLTROs) and other lending operations. Other assets and other liabilities cover all other, non-0monetary policy components. APP stands for asset purchase programme and PEPP for -12019 2021 2023 2025pandemic emergency purchase programme. The latest observations are for 7 April 2026. 2019 2021 2023 202507/04/2607/04/26Inflation developmentsRubric ©

HICP inflation Energy inflation Non-energy inflation

(annual percentage points) (annual percentage points) (annual percentage points)

Non-energy inflation PCCI excluding energy 12509 84010 7 3086 2065 4410 320 2 -1001Sources: Eurostat and ECB calculations. Sources: Eurostat and ECB calculations. Sources: Eurostat and ECB calculations.Note: Harmonised Index of Consumer Prices (HICP). The latest Note: The latest observations are for the first quarter of 2026. Notes: PCCI refers to the Persistent and Common Component of -200-2observations are for the first quarter of 2026. Inflation. PCCI excluding energy is computed taking the quarterly average of monthly series. The latest observations are for the fourth Q1 26Q1 19 Q3 20 Q1 22 Q3 23 Q1 25Q1 19 Q3 20 Q1 22 Q3 23 Q1 25Q1 19 Q3 20 Q1 22 Q3 23 Q1 25 quarter of 2025 for PCCI excluding energy and for the first quarter of 2026 for non-energy inflation. Q1 26 Q1 26GDP and components across different projection roundsRubric ©

Real GDP Real private Real total investment Real exports consumption(index: Q1 2022 = 100) (index: Q1 2022 = 100) (index: Q1 2022 = 100)

(index: Q1 2022 = 100)

December 2021 (pre-tightening)December 2021 (pre-tightening)December 2021 (pre-tightening)December 2021 (pre-tightening)June 2023 (pre-loosening)June 2023 (pre-loosening)June 2023 (pre-loosening)June 2023 (pre-loosening)December 2024December 2024December 2024December 2024September 2025September 2025September 2025September 2025December 2025December 2025December 2025December 2025March 2026March 2026March 2026March 2026 114116108109 114112108 112107110106 110106108 108105106104106104104104103 102102Sources: December 2021, June 2023, December Sources: December 2021, June 2023, December Sources: December 2021, June 2023, December Sources: December 2021, June 2023, December 1021022024, September 2025, December 2025 and March 2024, September 2025, December 2025 and March 2024, September 2025, December 2025 and March 2024, September 2025, December 2025 and March 1002026 Eurosystem/ECB staff macroeconomic 2026 Eurosystem/ECB staff macroeconomic 2026 Eurosystem/ECB staff macroeconomic 2026 Eurosystem/ECB staff macroeconomic 100101projections. projections. projections. projections. 9898100100 Q4 28Q1 22 Q1 24 Q1 26 Q1 28 Q4 28Q1 22 Q1 24 Q1 26 Q1 28 Q4 28Q1 22 Q1 24 Q1 26 Q1 28 Q4 28Q1 22 Q1 24 Q1 26 Q1 28Euro area export similarity with China and import elasticity of GDP in China Rubric ©

Share of sectors where both euro area and China: long-run import elasticity to GDP China display a high comparative advantage (rolling estimate over 40 quarters)

(index)

Estimated coefficient 2.0 45 1.540 1.035 0.530 0.0Sources: UN Trade and Development and ECB staff calculations. Sources: Al-Haschimi, A., Dvořáková, N., Le Roux, J. and Spital, T. (2025) based on Haver 25Notes: The chart displays the percentage of sectors with a revealed comparative Analytics data and ECB staff calculations.advantage (RCA) of greater than one in both the euro area and China as a share of the Notes: Estimates, based on a rolling window over 40 quarters, of the long-run coefficient of number of sectors in which the euro area has an RCA of greater than one. A total of 259 an error correction model containing an index of domestic demand. The point estimate sectors are considered for each year. Euro area aggregate computed as a weighted reported at date t corresponds to an estimation over the period from t-40 to t. The latest -0.520average based on export value weights. The latest observations are for 2024. observations are for the fourth quarter of 2025. Plus/minus one standard deviation2002 2008 2014 20202000 2005 2010 2015 2020 2025History of USD/EURRubric ©

USD/EUR

(level)

1.6 1.5 1.4 1.3 1.2 1.1 1.0

Sources: ECB and ECB staff calculations.0.9Notes: The dashed line shows the long-term average since 1999. The latest observation is for March 2026 (monthly data).

0.8 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 20251.161.18Current accountRubric ©

Euro area current account balance

(percentage of GDP)

Goods trade balanceServices trade balancePrimary incomeSecondary incomeCurrent account5 4 3 2 1 0 -1Source: Eurostat.Note: The latest observations are for 2025.-2 -3 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025Unemployment rateRubric ©

Unemployment rate

(percentage of labour force)

13 12 11 10 9 8

Source: Eurostat.7Notes: The chart shows the unemployment rate for EA21, holding the composition of the euro area constant over time. The latest observation are for February 2026.

6 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026Fiscal balanceRubric ©

Euro area general government budget balance

(percent of GDP)

0 -1 -2 -3 -4 -5 -6

Sources: Eurostat and ECB staff calculations (historical data) and March 2026 ECB staff projections (for 2025 figure). -7Note: The chart shows the general government budget balance for EA21, holding the composition of the euro area constant over time. Positive (negative) values stand for government budget surpluses (deficits).

-8 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Market-based inflation compensationRubric ©

Market-based inflation compensation

(percentages per annum)

Near-term (2026) 1Y1Y ILS 1Y2Y ILS 5Y5Y ILS 3.2 3.0 2.8 2.6 2.4 2.2 2.0 1.8 Sources: LSEG, Bloomberg and ECB calculations. Notes: 1Y1Y, 1Y2Y and 5Y5Y ILS are euro area inflation-linked swap forward rates at the one-year ahead one-year, one-year-ahead two-year and five-year1.6 ahead five-year horizons respectively. The near-term (2026) series is defined as the average of fixing contracts with maturity within the calendar year 2026, complemented by realised inflation for months for which fixing contracts are no longer available. All series refer to HICP excluding tobacco. The latest observations are for 13 April 2026.1.4 01/26 02/26 03/26 04/26 13/04/26Middle East conflict scenarios: commodity price assumptionsRubric ©

Oil prices Gas prices

(USD per barrel) (EUR per MWh)

Baseline March 2026 - cut-off 11 MarchBaseline - cut-off 11 MarchSevereSevereAdverseAdverseTechnical assumptions December 2025Technical assumptions December 20252022 quarterly price peak2022 quarterly price peakLatest future curve - cut-off 14 AprilLatest future curve - cut-off 14 April150210 190 130170 150 110130 110 9090 70Sources: Bloomberg, Refinitiv and ECB staff calculations. Sources: Bloomberg, Refinitiv and ECB staff calculations.7050Notes: The 2022 price peak refers to the second quarter of 2022. The latest observations Notes: The 2022 price peak refers to the second quarter of 2022. The latest observations are for 14 April 2026. are for 14 April 2026.30 10502023 2024 2025 2026 2027 20282023 2024 2025 2026 2027 2028 ©