The European Central Bank maintained its three key interest rates on Thursday as President Christine Lagarde addressed the lingering effects of the energy crisis.
Lagarde stated that the full inflationary impact of the energy shock had yet to play out, through the website of the bank.
She said: “Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out.”
She emphasized that policymakers watched the indirect and second-round effects of the shock carefully.
The bank kept rates unchanged to stabilize inflation at its 2% target over the medium term.
The institution observed that energy prices stayed highly volatile and remained above levels seen before the Middle East conflict.
Lagarde added that the energy shock and related uncertainties dragged down near-term economic growth.
The president urged governments to make fiscal responses to the energy crisis temporary, targeted and tailored.