For the European Parliament's Committee on Economic and Monetary Affairs (ECON) Sustainable Finance Lab wrote the September 2026 quarterly assessment of the ECB's monetary policy stance.

In the assessment we conclude that the ECB’s rate increases in June and September were justified. Growth surprised on the upside, inflation expectations remain anchored and there are no signs of a second-round effect. But inflation is driven by energy prices, and monetary policy cannot lower the cost of imported fossil fuels.

We flag financial stability risks. Credit growth is pushing the financial cycle towards pre-2008 levels, and France’s bond spread is now comparable to Italy’s.

Higher rates also create a green dilemma. They hit capital-intensive renewables harder than fossil fuels, which slows the investments that would reduce our energy dependence. The ECB should take this into account and fiscal and energy policy must speed up the transition.

The full assessment, Resilience with Risks: Growth, Inflation, and Financial Stability in the Euro Area, is available below and on the website of the European Parliament.