The Governing Council of the European Central Bank (ECB) announced Thursday that it has maintained its key interest rates. The rates for the deposit facility, main refinancing operations, and marginal lending facility were kept at 2.0%, 2.15%, and 2.40%, respectively. This represents the second consecutive period that the key interest rates have remained unchanged, following the last adjustment in June 2025.
The decision was made amid rising inflation across the euro area, a trend significantly influenced by the conflict in the Middle East. The ECB noted that the geopolitical situation has caused a sharp escalation in energy prices, thereby contributing to inflationary pressures and dampening economic sentiment. The bank stated that the long-term impact of the Middle East conflict on inflation and economic activity hinges on the duration and intensity of the energy price fluctuations.
Despite the headwinds, the ECB affirmed that the Governing Council remains well-positioned to manage current uncertainty. While short-term inflation expectations have increased substantially, longer-term expectations remain anchored near the target. The institution emphasized that its monetary policy stance will remain data-dependent, adopting a meeting-by-meeting approach.
Consequently, the determination of future interest rates will rely on a comprehensive assessment of incoming economic data, the inflation outlook, and the strength of monetary policy transmission mechanisms, without pre-committing to a specific rate path. This decision aligned with market expectations. Preliminary data from Eurostat indicated that annual inflation in the euro area is projected to rise to 3.0% in April, up from 2.6% in March.
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