ECB Holds Interest Rates Amid Iran War Uncertainty

The European Central Bank (ECB) has retained its interest rates due to uncertainties stemming from the Iran war's impact on inflation and economic growth. While short-term inflation is likely due to rising energy prices, the long-term effects remain unclear. The ECB aims to base future rate decisions on fresh data.

The European Central Bank (ECB) opted to maintain its key interest rates Thursday, citing rising uncertainties regarding inflation and economic growth ensuing from the Iran war. The conflict, expected to elevate energy costs, could spur short-term inflation while posing potential long-term economic growth risks.

ECB's rate-setting body left its deposit rate steady at 2 percent, unchanged since June 2025. The bank emphasized heightened unpredictability due to the conflict and the implications for inflation and growth.

This decision follows parallel actions by the Bank of England and the US Federal Reserve, both refraining from altering interest rates amid heightened economic uncertainty. European inflation decreased sharply to 1.9 percent, aligning with the ECB's 2 percent target.

(With inputs from agencies.)