ECB holds rates at 2%, warns of war impact
Shafaq News- Brussels
On Thursday, the European Central Bank (ECB) kept its key interest rate unchanged at 2%, cautioning that tensions and the war in Iran could weigh on growth and inflation prospects in the eurozone.
In a statement, the ECB indicated that “the war in the Middle East will have a material impact on near-term inflation through higher energy prices,” noting that its medium-term effects will depend on the intensity and duration of the conflict, and the extent to which energy costs pass through to consumer prices and the broader economy.
See below the baseline inflation outlook for the euro area, taken from our latest macroeconomic projections.In view of the current geopolitical uncertainty in the Middle East, two additional scenarios have also been prepared.Read the full report https://t.co/S0GBW1mhSc pic.twitter.com/KG42HLtm4F
— European Central Bank (@ecb) March 19, 2026
According to Reuters, financial markets expect eurozone inflation to rise to around 4% next year, with a return to the 2% target likely to take several years. These expectations come amid a surge in oil and gas prices since the start of US-Israeli attacks on Iran, raising the risk of higher energy costs, increased consumer prices, and slower economic activity in the eurozone, which comprises 21 countries and relies heavily on fuel imports.
