The European Central Bank kept its main deposit rate unchanged at 2.25% [1] on Thursday during a press conference in Frankfurt.
This decision maintains the current cost of borrowing across the Eurozone, but the bank said that a further rate hike remains a possibility for September. The signal suggests that the ECB is not yet confident that inflation is permanently under control.
Officials said that a fresh jump in energy prices is the primary driver for this cautious stance. These price increases threaten to keep inflation well above the bank's target of two% [2]. By keeping the door open for a September increase, the Governing Council is attempting to balance economic growth with the need to stabilize prices.
The decision comes after some officials considered a hike during the July meeting [3]. Ultimately, the council opted for stability on July 23, 2026 [3], though the outlook remains volatile due to external energy market pressures.
The bank's focus remains on the two% inflation goal [2]. If energy costs continue to climb, the ECB may be forced to tighten monetary policy further to prevent price increases from becoming embedded in the economy.
“The European Central Bank kept its main deposit rate unchanged at 2.25%.”
The ECB is currently in a holding pattern, choosing stability over immediate action while monitoring energy markets. By signaling a potential September hike, the bank is managing market expectations to prevent sudden volatility while maintaining the flexibility to combat inflation if energy costs do not recede.
