▲ European Central Bank (ECB) President Christine Lagarde
The European Central Bank (ECB) froze its three key interest rates on the 23rd (local time).
The ECB announced during its monetary policy meeting held in Frankfurt, Germany, that it would keep the deposit facility rate at 2.25 percent, the main refinancing operations rate at 2.40 percent, and the marginal lending facility rate at 2.65 percent.
ECB President Christine Lagarde stated, "Today's decision places us in a favorable position to navigate the uncertainties stemming from the conflict," while adding, "Due to the impact of rising energy prices, food, commodities, and service inflation since the onset of the conflict, inflation is expected to remain well above target through the first half of 2027."
The eurozone's consumer price inflation rate jumped from 1.7 percent year-on-year in January before the war to 3.2 percent in May.
Although it fell to 2.8 percent last month as international oil prices stabilized, it still remains above the ECB's target of 2.0 percent.
Analysts widely believe that the future path of ECB interest rate decisions depends on the Middle East conflict and trends in global oil prices.
As recent armed clashes between the United States and Iran escalated and pushed oil prices back up, speculations have emerged that interest rates could be hiked up to three more times.
The ECB stated, "The energy price outlook is similar to our baseline scenario from June and remains significantly higher than before the Middle East conflict," adding, "We are closely monitoring the intensity and duration of this shock, as well as secondary spillover effects."
President Lagarde noted that "the full impact of the energy shock has not yet materialized," predicting that if energy prices remain high, the cascading effects on other prices and wages could be even greater.
Amid growing inflation concerns triggered by the war involving Iran, the ECB raised its policy interest rates by 0.25 percentage points at its meeting last month.
That rate hike by the ECB marked the first in two years and nine months since September 2023.
(Photo: AP, Yonhap News)
※
Copying, redistribution, and unauthorized use in AI training are strictly prohibited.