Name: ECB keeps rates on hold as Iran war clouds outlook
Uploaded: 2026-03-19T17:08:39.000Z
Duration: 2 min
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The European Central bank left interest rates unchanged as expected on Thursday, but

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its chief, Christine Lagarde, said it was closely watching growth and inflation risks from surging oil prices and was ready to act if necessary.

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We are well positioned to demonstrate our capacity to apply our strategy and to be agile to do what is necessary because second point we are determined to ensure that inflation stabilizes at 2% medium term energy prices have jumped since the US Israeli war on Iran began on February 28th.

It's driving bets that inflation will be pushed far above the ECB's 2% target within months.

That could force the central bank to tighten policy to prevent rapid price growth from becoming entrenched Markets now expect more than two hikes in the ECB's 2% deposit rate this year.

Policymakers were accused of acting too late on the 2021-2022 inflation surge after Russia's invasion of Ukraine, and

analysts think they will be quicker to pull the trigger this time.

Central banks normally look past such energy shops since expensive fuel saps consumer demand and drags down economic growth.

Policy moves will ultimately depend on the duration of the war and the ECB's own economic projections reflected this uncertainty.

It will have a material impact on near term inflation through higher energy prices.

Its medium term implications will depend both on the intensity and duration of the conflict and how the energy prices affect consumer prices in the economy.

Financial market pricing now assumes inflation will rise to the vicinity of 3.7% in the year ahead, but

these indicators are volatile and are prone to rapid changes.