04/30/2026April 30, 2026German experts welcome ECB decision to leave interest rates unchanged
The decision was announced from the European Central Bank headquarters in FrankfurtImage: Jana Rodenbusch/REUTERS
German financial experts have broadly welcomed a European Central Bank decision to leave interest rates unchanged.
Policymakers in Frankfurt were considering an increase as soaring oil prices from the Iran war push inflation in the eurozone higher.
A combination of slow growth and high inflation, or “stagflation,” threatens to become a headache for the ECB, which left its benchmark interest rate unchanged at 2% on Thursday.
“The longer the war continues and the longer energy prices remain high, the stronger is the likely impact on broader inflation and the economy,” ECB policymakers said.
Most analysts agreed that it was too early to raise interest rates, with an increase likely to stifle already floundering growth.
The CEO of the German Insurance Association (GDV), Jörg Asmussen, said it was understandable that the ECB had not acted.
“Given the uncertain duration of the Iran war and the depth of its economic impact, the ECB, like all central banks, is currently navigating in the fog,” Asmussen said.
Lena Drager, a research director at the Kiel Institute for the World Economy, agreed but said the bank needed to be ready to swiftly raise interest rates if necessary.
“A preventive interest rate hike would be wrong now. It would further burden the already weak economy without being able to directly combat the energy price shock. The right answer is: wait and see, but with a clear response function.”