The Governing Council of the European Central Bank (ECB) announced on Thursday that it has decided to maintain its key interest rates unchanged. This 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 key interest rates—for the deposit facility, main refinancing operations, and marginal lending facility—were kept at 2.0%, 2.15%, and 2.40%, respectively.
These levels represent the first time they have remained unchanged for nearly a year, following the last adjustment in June 2025. The ECB noted that the conflict in the Middle East has caused a sharp increase in energy prices, thereby increasing inflation and dampening economic sentiment. The central bank stated that the medium-term impact of the war on inflation and economic activity will depend on the intensity and duration of the energy price shock, as well as any resulting indirect effects.
Despite the current uncertainties, the ECB indicated that the Governing Council remains positioned to manage the situation. While the euro area entered this period with inflation near the 2% target, recent quarters have shown economic resilience. Although longer-term inflation expectations remain stable, short-term expectations have risen considerably.
The ECB confirmed that its policy decisions will adopt a data-dependent, meeting-by-meeting approach, basing its assessment of the inflation outlook and associated risks on incoming economic and financial data. The Council is not committing to a specific path for future interest rates. This decision aligned with market forecasts from the ECB’s April meeting, though analysts anticipate a potential shift at the June meeting due to ongoing inflation pressures stemming from the Middle East conflict.
Preliminary data from Eurostat projected annual inflation in the euro area to rise to 3.0% in April from 2.6% in March.
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