ECB Holds Rates at 2.25% Amid Renewed Iran Tensions and Oil Price Surge

The European Central Bank (ECB) decided on July 23, 2026, to keep its key interest rates unchanged, with the deposit facility rate at 2.25%, pausing after its first hike in three years in June. The move comes as renewed conflict between the US and Iran drives oil prices near $100 per barrel, threatening to reignite inflation in the eurozone, which had eased to 2.8% in June Source: La República, ABC.

The Decision

The ECB held rates steady despite a volatile energy market, stating that "the inflation impact of the energy shock has not yet fully materialised" Source: El País. The decision was unanimous, though some Governing Council members debated a further hike Source: El Confidencial. The bank reaffirmed its data-dependent approach, with President Christine Lagarde noting that "the energy shock could intensify further" Source: El País.

Market and Energy Context

Oil prices have surged more than 40% since early July, with Brent crude touching $100 after Houthi attacks on tankers in the Red Sea Source: La República, El Mundo. Natural gas prices also spiked to €64/MWh, a 2.5-year high Source: El Mundo. Analysts widely expect a 25-basis-point rate hike in September, when new ECB staff projections will be available Source: ABC, La Vanguardia.

Outlook