ECB holds interest rates steady as Eurozone inflation drops to 2.8%

The European Central Bank (ECB) announced on Thursday that it will keep its key interest rates steady, maintaining the deposit rate at 2.25%. This decision comes after the Eurozone's inflation rate eased to 2.8% in June, offering a slight reprieve from earlier price pressures.

In its statement, the ECB noted that while energy price outlooks are volatile, they are currently near the reference scenario projected in June and remain significantly above pre-Middle East conflict levels. The central bank also kept the main refinancing operations rate at 2.4% and the marginal lending facility rate at 2.65%.

Despite the dip in inflation, the ECB emphasized that uncertainty remains high. It highlighted that the full inflationary impact of the energy disruption has yet to materialize. "Therefore, the Governing Council is closely monitoring the intensity and duration of the disruption, as well as its indirect and second-round effects," the bank stated.

The Governing Council reiterated its commitment to ensuring inflation stabilizes at its 2% medium-term objective. The bank affirmed its position to navigate the uncertainty caused by the ongoing conflict. Future interest rate decisions will be data-dependent, focusing on the inflation outlook and associated risks. ECB President Christine Lagarde is expected to provide further details at a press conference.