The European Central Bank (ECB) said in its economic bulletin on Thursday that "the disinflation process is well on track," even though the headline inflation for 2025 was revised upward to 2.3%.

"At the same time, lower demand for euro area exports as a result of higher tariffs and a re-routing of exports into the euro area from countries with overcapacity would put downward pressure on inflation. Geopolitical tensions create two-sided inflation risks as regards energy markets, consumer confidence and business investment," the report showed.

The ECB Governing Council further revealed that economic activity in the euro area "likely grew modestly in the fourth quarter of 2024," with manufacturing contracting and services showing resilience. The institution predicted that headline inflation will average 2.3% in 2025, 1.9% in 2026, and 2% in 2027, and the economic expansion at 0.9% in 2025, rising to 1.2% in 2026, and 1.3% in 2027, all being slightly revised down compared to February's assessment.