Recent Middle East energy price shocks have kept euro-area inflation well above the ECB’s 2% target, with staff projections showing 3.0% headline inflation for 2026 and core measures near 2.5%. The Governing Council hiked the deposit facility rate 25 basis points to 2.50% on September 10 and signaled further tightening could occur as soon as October, consistent with data-dependent guidance that precludes easing. Market-implied odds near 95.5% against a 2026 cut reflect this hawkish stance, reinforced by resilient growth forecasts and the absence of any official rate-cut signals. Key upcoming catalysts include the October 28–29 and December meetings, where fresh projections will be released. Tail risks that could reopen easing discussions include rapid de-escalation of energy tensions or a sharper-than-expected growth slowdown.