Unchanged kept the Epipettes the European Central Bank on Thursday, as it opted to collect more data before making a new move. Its base rate stands at 2%.
The decision was made after preliminary data was released on Thursday, which showed that inflation in the eurozone rose to 3% in April, mainly due to increases in energy costs in the region.
In a statement, the bank said that while its previous assessment of the inflation outlook remained largely unchanged, “the open risks to inflation and the downside risks to growth have intensified.”
The ECB said its Governing Council remains committed to setting monetary policy that will ensure that inflation is stabilized at the 2% target over the medium term.
Recognizing that the war in the Middle East has led to a sharp increase in energy prices, pushing up inflation and negatively affecting economic sentiment, the ECB noted that “the impact of the war on medium-term inflation and economic activity will depend on the intensity and duration of the shock to energy prices, as well as the extent of its indirect and spillover effects”.
“The longer the war lasts and the longer energy prices remain high, the stronger the potential impact on headline inflation and the economy,” the bank said.
It also said it would closely monitor the situation and adopt a approach based on available data and assessed at each meeting to determine the stance of monetary policy.
He finally stressed that officials would not commit in advance to a specific path for interest rates.
Economists think the bank’s meeting in June will be the one to watch, as it may decide a 25 basis point hike, resulting in the base rate rising to 2.25%.
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