ECB Holds Rates at 2.25%, Says Full Inflationary Impact of Energy Shock Still to Come

By Marta Vilar – FRANKFURT (Econostream) – The European Central Bank’s Governing Council on Thursday left its key interest rates unchanged, while noting that current conditions stand close to the baseline of the June projections and the full inflationary impact of the shock is still to come.

The three ECB interest rates will stay at 2.25% for the deposit facility, at 2.40% for the main refinancing operations and at 2.65% for the marginal lending facility.

In its statement, the Governing Council said that “[t]he outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East.”

“Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out,” the document said.

The document said the ECB would closely monitor the intensity and duration of the shock, along with any indirect and second-round effects.

The ECB was “well positioned” to navigate the current uncertainty, the press release said.

“The Governing Council is committed to setting monetary policy to ensure that inflation stabilizes at its 2% target in the medium term,” it said.