The European Central Bank kept its three key interest rates unchanged on April 30, opting for a wait-and-see stance as higher energy prices fed inflation risks in the eurozone.
The ECB left its deposit facility rate at 2 percent, its main refinancing rate at 2.15 percent and its marginal lending facility at 2.40 percent.
The bank warned that “upside risks to inflation and downside risks to growth have intensified.”
The Governing Council said it remained committed to ensuring that inflation stabilizes at its 2 percent medium-term target.
“The war in the Middle East has led to a sharp increase in energy prices, pushing up inflation and weighing on economic sentiment,” the ECB said.
It said the impact on medium-term inflation and economic activity would depend on how severe and persistent the energy shock proves to be, as well as the scale of indirect and second-round effects.
ECB President Christine Lagarde said the eurozone had entered the period of rising energy prices with inflation near target and the economy showing resilience, but added that short-term inflation expectations had risen significantly.
Inflation in the euro area rose to 3 percent in April from 2.6 percent in March and 1.9 percent in February, driven by surging energy prices. Energy inflation jumped to 10.9 percent in April from 5.1 percent a month earlier.
Inflation excluding energy and food eased slightly to 2.2 percent from 2.3 percent in March, while services inflation fell to 3 percent from 3.2 percent.
Lagarde said high energy costs were expected to keep inflation above 2 percent in the near term and that the broader effect on prices and the economy would grow stronger if energy prices stayed elevated for longer.
The ECB said the eurozone economy grew by 0.1 percent in the first quarter of 2026.
