The European Central Bank (ECB) has opted to keep its interest rates unchanged during a meeting of its governing council on Thursday. The deposit rate remains at 2.00%, the main refinancing rate is at 2.15%, and the marginal lending facility rate is at 2.40%. This decision comes in light of increased uncertainty regarding economic conditions due to the war in the Middle East, which poses the risk of faster-than-expected inflation and slower economic growth.

The ECB's statement highlights the significant short-term impact that the conflict is having on inflation, particularly due to rising energy prices. The outlook for medium-term effects depends on the conflict's duration and intensity, as well as how energy prices impact consumer prices and the broader economy. In light of these factors, the central bank has revised its inflation forecast for the Eurozone to 2.6% while simultaneously lowering its economic growth prediction to 0.9%.

Jan von Gerich, chief analyst at Nordea, commented via social media platform X that the ECB is keeping all options open at this stage, suggesting that while they have decided not to raise rates for now, future hikes remain a possibility. This cautious approach reflects the bank's recognition of the volatile economic landscape and the need to balance inflation control with supporting economic growth.