ECB Holds Interest Rates as Energy Crisis Inflation Impact Remains Uncertain

The European Central Bank (ECB) has decided to keep interest rates unchanged at 2.25%, 2.40%, and 2.65% for the deposit facility rate, main refinancing operations rate, and marginal lending facility rate respectively.

This decision follows a previous 25-basis-point rise in interest rates. The ECB notes that energy prices are highly volatile but currently close to their baseline scenario projections from June and above pre-conflict levels.

The full inflationary impact of the energy crisis has not yet materialized, according to the central bank. The eurozone inflation rate moderated by four tenths of a percentage point in June to 2.8%, down from 3.2% in May. However, renewed tensions in the Middle East are increasing pressure on prices.