On Thursday, the European Central Bank (ECB) decided to keep its key deposit rate unchanged at 2%, a level it has maintained since June 2025. This decision comes amid rising energy prices driven by the ongoing conflict in Iran, which the ECB warns is contributing to increasing inflation and negatively affecting economic sentiment. The bank highlighted that the longer the war persists, the greater the potential impact on broader inflation and the economy. Despite these concerns, the ECB is adopting a wait-and-see approach, similar to other central banks like the Bank of Japan and the US Federal Reserve, which also kept rates steady this week. ECB President Christine Lagarde emphasized the need for more data before making any policy changes, indicating the bank's cautious stance. However, market analysts are predicting a potential quarter-point rate hike at the next ECB meeting in June, with expectations for two to three rate increases throughout the year as inflation pressures mount.