ECB holds interest rates as inflation rises

The European Central Bank (ECB) kept its key deposit rate unchanged at 2.5% on Thursday, as rising inflation and turmoil in France’s bond market clouded the eurozone’s economic outlook.

The decision came hours after ECB President Christine Lagarde announced she would leave her post next February, several months before her term was due to end.

Inflation across the eurozone rose to 3.8% in September, up from 3.2% in August, moving further above the ECB’s 2% target. Higher energy prices linked to the Iran war have contributed to inflationary pressures, prompting two interest rate increases this year, the latest in September.

The ECB also kept its main refinancing rate at 2.65% and its marginal lending rate at 2.90%.

In its statement, the central bank warned that rising energy prices posed risks to inflation and economic growth. While underlying inflation remained broadly stable and wages had yet to respond significantly, it said the scale and duration of the energy shock could push prices higher while weighing on growth.

The ECB also noted that financing conditions had tightened since its previous meeting, adding that it would not commit to a predetermined interest rate path.

via Euroenws