The European Central Bank (BCE) has decided to keep interest rates unchanged, with the deposit facility at 2.5%. The decision represents a pause in the tightening of monetary policy at a particularly delicate moment for the eurozone economy, marked by the rebound in energy prices, rising inflation and tensions in sovereign debt markets.
The institution faces a complex scenario: eurozone inflation climbed to 3.8% in September, driven mainly by the increase in energy prices in the context of the war in Iran. At the same time, uncertainty over the evolution of the conflict threatens to weaken economic growth. The BCE itself warns that the rise in energy prices may fuel new inflationary pressures and, at the same time, harm activity.
The decision to keep rates unchanged does not therefore mean that the body considers inflation under control or that it rules out further increases. Markets and analysts remain attentive to the evolution of prices and the duration of the energy shock in order to anticipate the next moves. December is shaping up as a key date to review the direction of monetary policy, although the BCE has not committed in advance to a specific timetable.
The BCE itself warns that the rise in energy prices may fuel new inflationary pressures and, at the same time, harm activity
The increase in the price of oil and gas has become one of the main risk factors for inflation prospects. The rise in energy costs can gradually pass through to other goods and services, with effects on household consumption and companies' costs. If those pressures persist, the central bank could be forced to maintain a more restrictive monetary policy for longer.
The BCE's latest projections already reflected in September general inflation of 3% for the whole of 2026 and 2.5% for 2027. The institution also raised its forecasts for underlying inflation, which excludes energy and food, and anticipated that prices could remain above its 2% target for an extended period.
The duration and intensity of the conflict in the Middle East will be decisive in determining whether the increase in energy prices ultimately has more persistent effects on the economy. A easing of tensions could facilitate a moderation in prices, while a prolongation of the shock would increase the risk of combining high inflation with weaker growth.