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ECB Holds Deposit Rate at 2.25%, Cites Inflation Risks
The ECB's hold at 2.25% comes with energy inflation still a risk. The Council is not pre-committing to a rate path. Lagarde's press conference at 14:45 CET will be key for forward guidance.
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The European Central Bank kept its key interest rates unchanged at its latest meeting, leaving the deposit facility rate at 2.25%. The decision, widely expected by markets, came as the ECB continues to assess the impact of the energy shock and elevated uncertainty, the central bank said in a statement.
The outlook for energy prices is highly volatile but currently close to the baseline of the June staff projections, well above levels recorded before the conflict in the Middle East, the ECB said. The full inflationary impact of the energy shock has yet to play out, and the Governing Council is monitoring indirect and second-round effects. The Council is not pre-committing to a rate path and will set policy based on inflation data, underlying inflation dynamics, and the strength of monetary transmission, the statement said.