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ECB expected to hold key rates steady as Middle East tensions shift focus

The decision is set for Thursday at 12:15 GMT, with Lagarde’s press conference at 12:45 GMT as traders reassess potential rate hikes.

Reported · Written up by our desk · Central Banks

FXStreet reports the European Central Bank is expected to keep its main refinancing operations rate steady at 2.4% and its deposit facility rate at 2.25%. The announcement is scheduled for Thursday at 12:15 GMT, followed by ECB President Christine Lagarde’s press conference at 12:45 GMT.

According to FXStreet, this meeting is not expected to come with updated staff economic projections, unlike in June when the ECB hiked rates by 25 basis points tied to the energy shock linked to the Middle East war. The ECB’s June guidance also emphasized keeping communication neutral, neither implying a first in a sequence nor a one off move.

FXStreet adds that since the June meeting, inflation has cooled more than expected, aided by lower energy prices and easing underlying price pressures. Eurozone core HICP rose 0.2% month on month in June, down from 0.3% previously, and a brief de escalation in Middle East tensions pulled oil back toward pre war levels.

However, FXStreet notes natural gas and refined fuel prices remain elevated, inflation expectations are still projected to stay above the ECB’s 2% target through 2027, and renewed Middle East hostilities earlier this month have revived an oil price uptrend and inflation concerns. The Eurozone economy is also losing momentum, with GDP contracting 0.2% in the first quarter of 2026 versus an estimated 0.1% growth expected, leaving the ECB balancing support for growth against containing inflation.

Latest closeNat gas $2.883 ▲0.6%

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