The European Central Bank kept interest rates unchanged on Thursday, warning that rising energy costs could intensify inflation pressures and weaken economic growth across the euro zone.
The Governing Council maintained its deposit rate at 2.50%, while the main refinancing rate and marginal lending rate remained at 2.65% and 2.90%, respectively. Policymakers reaffirmed their commitment to bringing inflation sustainably back to the bank’s 2% medium-term target.
The decision comes as inflation accelerated to 3.8% in September, up from 3.2% in August. Energy inflation climbed to 18.9%, highlighting the pressure that higher fuel costs are placing on the region’s economy, according to the ECB’s monetary policy statement.
Although underlying inflation has remained broadly stable and wages have not yet shown a substantial response to the energy shock, policymakers cautioned that persistently expensive energy could spread price pressures more widely. The bank also noted that tighter financing conditions were likely to restrain both growth and inflation.
Attention now turns to December. According to Reuters, investors and economists continue to anticipate a possible interest rate increase, with incoming economic data expected to shape the bank’s next decision. A further rise would depend on whether inflation pressures justify additional tightening.
The ECB made clear that it had committed to no specific path for rates. Its decisions will continue to be taken meeting by meeting, reflecting the inflation outlook, underlying price trends and the effects of monetary policy on the economy.
