US EditionEuropean Central Bank holds rates unchanged as energy shock from Iran war causes massive uncertainty
The ECB paused rate hikes at 2% amid uncertainty from Iran war energy shocks, forecasting 2.6% inflation in 2026 with risks of higher inflation and lower growth.
- The European Central Bank held its key interest rate at 2% on Thursday, March 19, 2026, warning that the Iran war creates significant uncertainty for euro zone inflation and economic growth.
- Surging energy costs following the Iran war have stoked inflation concerns, reviving painful memories of the 2022 Russia-Ukraine conflict when officials initially dismissed price spikes as transitory.
- Executive Board member Isabel Schnabel warned of "scars" from previous energy crises, while HSBC economist Fabio Balboni suggested sustained price pressures could force the ECB to hike rates quicker.
- The U.S. Federal Reserve and Bank of England held rates steady this week, reflecting a broader trend among global central banks monitoring Middle East tensions and their impact on borrowing costs.
- Financial markets expect inflation to climb above 3% over the next year, though the ECB's projections remain uncertain given the unpredictable duration and intensity of the ongoing conflict.
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The European Central Bank kept interest rates unchanged for a sixth consecutive meeting, awaiting clarification on the extent of the negative effects that the war in Iran will have on inflation and the economy. The deposit rate was kept at 2% on Thursday - as all analysts in a Bloomberg survey had predicted. Bank officials again gave no indication of future measures, reiterating that they would make decisions from one meeting to another, based o…
European Central Bank, Bank of England hold rates as war clouds outlook
European Central Bank and Bank of England held interest rates steady on Thursday, citing the Iran war's impact on inflation and growth. Both central banks warned that surging energy prices due to the conflict will significantly affect near-term inflation. Further action will be monitored based on the evolving economic landscape.
The key interest rates in the euro area remain unchanged despite rising energy prices due to the Iran war. The European Central Bank left the deposit rate, which is important for banks and savers, at 2.0 percent for the sixth time in a row.
DECRYPTAGE - The European Central Bank maintained its unchanged rates at the Governing Council on Thursday. Christine Lagarde tries to reassure by committing herself to doing "everything necessary" to stabilize prices.
Markets are expected to rise by 2.5% by the end of the year. The ECB understands that in the base scenario it may not have to rise. But in more adverse scenarios inflation may exceed 4%.
The Governing Council of the European Central Bank has decided to leave the base interest rates unchanged.
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