The European Central Bank (ECB) has decided to keep its deposit rate at 2.25%, leaving room for potential future rate hikes as the conflict in the Middle East continues to impact energy prices.
ECB’s Decision
The ECB’s decision to keep rates unchanged was largely expected, given the current economic uncertainty and the need for more data on the outlook. The bank stated that it is “closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects.”
Experts believe that the ECB is in a “wait and see” mode, needing to gather more data before making any further decisions on interest rates. The bank’s focus remains on inflationary pressures, with the latest events in the Middle East set to push up the ECB’s expectations of where inflation is heading later this year.
The euro has extended its falls, down 0.28% at $1.1378, while interest-rate sensitive two-year bond yields across the euro area have held higher on the day. Money markets are pricing in a high chance of two more rate increases by the end of the year.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
