On Thursday, the European Central Bank (ECB) decided to keep its key interest rate steady at 2.5%, aligning with market expectations despite euro zone inflation reaching a three-year high of 3.8%. This decision follows a 25 basis point increase in September.
The ECB's Governing Council highlighted that while rising energy prices, which surged by 18.8% due to ongoing geopolitical tensions in the Middle East, present risks to inflation, the overall stability of underlying inflation and wages remains intact. The tightening of financing conditions since the last meeting is anticipated to affect both inflation and growth negatively.
This situation underscores the delicate balance the ECB must maintain as it navigates rising prices while trying to support economic growth