ECB Holds Interest Rates Steady Amid Middle East Conflict Risks

The European Central Bank (ECB) maintained its interest rates steady at 2.25% as widely anticipated, citing uncertainty around energy price shocks driven by the ongoing conflict in the Middle East.

Despite the increase in global oil prices, which rose above $100 a barrel on Thursday, the ECB opted to keep its key deposit facility unchanged, leaving open the possibility of a borrowing cost hike later this year.

The bank warned that energy prices are 'highly volatile' and currently stand close to the baseline staff projections issued in June. The ECB said it is closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects.