ECB Holds Rates Steady as Energy Risks Persist

2026-07-23 12:18 By Joana Ferreira 1 min. read

The European Central Bank left its key interest rates unchanged at its July meeting, following a 25bp increase in June, the first rate hike in three years, driven by rising energy prices and persistent inflationary pressures.

Since then, policymakers have struck a more cautious tone, adopting a "wait-and-see" approach as softer inflation, wage growth, economic activity, and inflation expectations have reduced the urgency for another move.

The ECB said the outlook for energy prices remains broadly in line with its June projections despite continued volatility, while warning that uncertainty remains high and the full inflationary impact of the energy shock has yet to emerge.

Policymakers also noted they will continue to monitor its broader effects on inflation and the economy.

At the post-meeting press conference, ECB President Lagarde warned that the longer energy prices remain elevated, "the more likely they are to drive up broader inflation through indirect and second-round effects."



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ECB Holds Rates Steady as Energy Risks Persist
The European Central Bank left its key interest rates unchanged at its July meeting, following a 25bp increase in June, the first rate hike in three years, driven by rising energy prices and persistent inflationary pressures. Since then, policymakers have struck a more cautious tone, adopting a "wait-and-see" approach as softer inflation, wage growth, economic activity, and inflation expectations have reduced the urgency for another move. The ECB said the outlook for energy prices remains broadly in line with its June projections despite continued volatility, while warning that uncertainty remains high and the full inflationary impact of the energy shock has yet to emerge. Policymakers also noted they will continue to monitor its broader effects on inflation and the economy. At the post-meeting press conference, ECB President Lagarde warned that the longer energy prices remain elevated, "the more likely they are to drive up broader inflation through indirect and second-round effects."
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