European Central Bank Holds Rates Steady: "War to Intensify Impact on Prices and Economy"

The European Central Bank (ECB) has decided to keep interest rates unchanged, influenced by heightened inflation concerns stemming from the ongoing war between the United States and Iran.

Reuters Yonhap News

On the 30th (local time), the ECB held its monetary policy meeting and announced that it would maintain policy rates, with the deposit facility rate at 2.00% per annum, the main refinancing operations rate at 2.15%, and the marginal lending facility rate at 2.40%. The ECB stated, "Recent information has, on the whole, been in line with our previous assessment of the inflation outlook," but added, "However, upside risks to inflation and downside risks to economic growth have both increased."

The Eurozone's consumer price inflation rate for April, as provisionally announced on this day, was 3.0%. This is higher than last month's 2.6%, when the effects of elevated oil prices due to the Middle East conflict began to be felt, and it also exceeds the ECB's medium-term target of 2.0%. In the first quarter of this year, the Eurozone's economic growth rate was just 0.1% compared to the previous quarter, fueling concerns over stagflation—a combination of high inflation and economic stagnation. The ECB warned, "The longer the war persists and high energy prices are sustained, the greater the impact will be on overall prices and the economy."

From June 2024, the ECB has lowered the deposit facility rate by 2.00 percentage points over the course of a year. From July of last year until today, the ECB has kept rates unchanged at all seven meetings. The market expects the ECB to begin raising policy rates at its June meeting and to increase them two more times by the end of the year.

This content was produced with the assistance of AI translation services.