The Governing Council of the European Central Bank (ECB) announced on Thursday that it has maintained its key interest rates. The rates for the deposit facility, main refinancing operations, and marginal lending facility remain at 2.0%, 2.15%, and 2.40%, respectively. This decision marks the longest period without an adjustment to these rates, as the ECB last altered them in June 2025.
The decision was made against a backdrop of rising inflation across the euro area, which has been influenced by the conflict in the Middle East. The ECB noted that the geopolitical situation has caused a sharp escalation in energy prices, subsequently increasing inflation and affecting overall economic sentiment. The central bank stated that the long-term impact of the conflict on inflation and economic activity will depend on the sustained intensity and duration of the energy price shock.
Despite the elevated short-term inflation expectations, the Governing Council indicated that it remains well-positioned to navigate current uncertainties. While the euro area entered this period with inflation near the 2% target, the ECB emphasized that long-term inflation expectations remain anchored. Looking ahead, the ECB confirmed it will adopt a data-dependent, meeting-by-meeting approach to monetary policy.
Future decisions regarding interest rates will be based on a thorough assessment of the inflation outlook, associated risks, and incoming economic data. The statement clarified that the Governing Council is not pre-committing to any specific rate path. Preliminary data from Eurostat indicated that annual inflation in the euro area is projected to rise to 3.0% in April from 2.6% in March.
Topics: #interest #rates #middle
