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 comes amid rising inflation across the euro area, which the ECB attributes in part to the ongoing conflict in the middle East. Specifically, the rates for the deposit facility, main refinancing operations, and marginal lending facility were kept steady at 2.0%, 2.15%, and 2.40%, respectively.
This marks the first time rates have remained unchanged for nearly a year, following the last adjustment in June 2025. The ECB noted that the war in the middle East has caused a sharp increase in energy prices, subsequently driving up inflation and dampening economic sentiment. The central bank stated that the medium-term impact of the conflict on inflation and economic activity will depend on the persistence and intensity of energy price shocks and their secondary effects.
The statement warned that continued conflict and elevated energy prices could significantly impact overall inflation and the economy. Despite the current uncertainty, the ECB stated that the Governing Council remains well-positioned. It highlighted that the euro area entered this period with inflation near its 2% target and has demonstrated recent economic resilience.
While longer-term inflation expectations remain anchored, short-term expectations have increased substantially. The ECB confirmed that its policy decisions will follow a data-dependent, meeting-by-meeting approach, basing any changes to interest rates on an assessment of the inflation outlook, associated risks, and incoming economic data. The Governing Council declined to pre-commit to any specific path for future interest rates.
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