ECB holds rates at 2.25% as reignited Iran war keeps hike in play

The European Central Bank left its benchmark interest rate unchanged at 2.25% on Thursday, pausing after delivering its first rate hike in three years back in June. Policymakers said easing inflation across the eurozone had bought them time to assess incoming data before deciding on further moves.

President Christine Lagarde said the door remains open to a second hike as early as September, pointing to renewed fighting in the Middle East as a fresh source of energy-price pressure. Oil prices topped $100 a barrel this week for the first time since May amid the widening Iran conflict.

Economists said the ECB is now walking a narrower path than earlier in the year, balancing a fragile growth outlook against the risk that an energy shock reignites inflation. Markets will watch incoming eurozone inflation data closely ahead of the bank's next meeting.