FX.co ★ ECB Set to Hold Rates Amid Rising Inflation Risks

The European Central Bank is expected to leave interest rates unchanged for a sixth consecutive meeting on Thursday, maintaining a cautious stance as policymakers contend with heightened uncertainty stemming from escalating tensions in the Middle East and persistent inflation risks. The ECB will also publish updated economic projections, while President Christine Lagarde’s press conference will be scrutinized for clues on how the bank intends to address the economic fallout from the ongoing conflict. Last week, Lagarde reaffirmed the ECB’s commitment to keeping inflation under control, declaring that the bank will “do all that is necessary” to achieve this objective. Recent comments from officials indicate a tilt toward a more hawkish posture, as policymakers remain alert to the danger that another energy shock could unleash more entrenched, structural inflationary pressures.