Brussels, Belgium. The European Central Bank kept its three key interest rates unchanged on Thursday, citing uncertainty over the impact of the Middle East conflict on energy prices and inflation in the euro area. The Governing Council said it remains committed to returning inflation to its 2 per cent medium-term target.
Rates remain unchanged
The ECB left the deposit facility rate at 2.25 per cent, the main refinancing operations rate at 2.40 per cent, and the marginal lending facility rate at 2.65 per cent.
It said maintaining current rates leaves policymakers in a strong position to respond to uncertainty linked to the geopolitical situation.
Energy price outlook
The Governing Council said the outlook for energy prices remains highly volatile but is broadly in line with the baseline scenario in the June Eurosystem staff projections.
However, it said energy prices remain well above levels recorded before the outbreak of the Middle East conflict, while uncertainty continues to weigh on the economic outlook.
The central bank said the full inflationary impact of the energy shock has not yet been fully realised.
Future policy decisions
The ECB said it is monitoring the intensity and duration of the shock, as well as possible indirect effects and second-round impacts on prices and wages.
Future interest rate decisions will continue to be data-dependent and made meeting by meeting, rather than following a predetermined path, the Governing Council said.
It added that decisions will be based on its assessment of the inflation outlook and related risks, taking into account incoming economic and financial data.