AKP Phnom Penh, 24 July, 2026--
The European Central Bank (ECB) on Thursday announced that it will keep the three key interest rates unchanged.
The decision to put interest rates on hold has been made at a time when oil prices are shooting up due to the escalation of the Iran war.
"The outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East," the ECB said in a press release.
The euro area inflation edged down to 2.8 percent in June from 3.2 percent in May. Energy price inflation declined to 8.5 percent in June from 10.8 percent in May, according to the statistical office of the European Commission.
Despite the decline in June, the overall rise in energy prices since the start of the conflict in the Middle East "is likely to keep inflation well above target into the first half of 2027," said an ECB statement.
"Surprisingly slow inflation data in June and very little sign of indirect or even second-round effects should have taken away the urge to hike policy rates further," Carsten Brzeski, global head of macro for ING Research, wrote in a note last week.
Surveys show that activity in the services sector has recovered partly and manufacturing has continued to hold up.
The interest rate on the deposit facility, the ECB's main policy rate, remains at 2.25 percent, while the rates on the main refinancing operations and the marginal lending facility remain unchanged at 2.4 percent and 2.65 percent, respectively.
The ECB raised the three key interest rates by 25 basis points in June, its first rate hike since September 2023.
While acknowledging the current high uncertainty, the ECB said that it will closely monitor the intensity and duration of the price shock and its indirect and second-round effects.
"With today's decision, we remain well positioned to navigate the uncertainty caused by the conflict," the ECB said.

AKP-Xinhua