The ECB left interest rates unchanged and pointed to an energy shock it says has yet to feed fully into inflation

The European Central Bank held. Its Governing Council kept the three key interest rates unchanged on Thursday, leaving the deposit facility rate at 2.25 percent, the main refinancing rate at 2.40 percent and the marginal lending rate at 2.65 percent.

The reason it gave was energy. The bank said the outlook for energy prices, while highly volatile, now sits close to the baseline of its June staff projections and well above the levels recorded before the conflict in the Middle East. It said the full inflationary impact of that shock has yet to play out, and that it is watching the intensity and duration of the shock along with its indirect and second-round effects.

There was no forward guidance. The Governing Council said it is not pre-committing to a particular rate path and will decide meeting by meeting, based on the inflation outlook and the incoming economic and financial data. The asset purchase and pandemic emergency purchase portfolios continue to run down, because the Eurosystem no longer reinvests the principal from maturing securities.

ECB President Christine Lagarde was due to comment on the decision at a press conference at 14:45 CET.