European Central Bank expected to maintain interest rates amid regional conflict

The European Central Bank (ECB) is widely expected to keep its deposit interest rate unchanged at 2% during its meeting this Thursday. The bank has held this rate since June 2025 as it assesses the impact of rising inflation, which reached 2.6% in March, exceeding the ECB’s 2% target. Analysts attribute the inflationary pressure to the energy shock triggered by the ongoing conflict between the United States, Israel, and Iran. ING economist Carsten Brzeski noted that the ECB has shifted from long-term forecasting to a crisis-management mode. U.S. President Donald Trump has extended a ceasefire with Iran to facilitate peace negotiations. Although combat operations have largely subsided in the region, the Strait of Hormuz remains effectively closed to oil tanker traffic. The ECB continues to monitor whether the current inflation spike will be transient or cause long-term economic damage.