Mumbai, Oct 26 (KNN) The European Central Bank (ECB) would join the U.S. Federal Reserve, Bank of England and others to leave interest rates unchanged for the first time in over a year as the Israel-Hamas war hits the already downbeat prospects for Europe's economy. 

In Europe, inflation peaked at 10.6 per cent in October for the 20 countries that use the euro currency as Russia’s war in Ukraine took a toll.

It would be the bank's first meeting with no change after a torrid pace of 10 straight increases dating to July 2022 that pushed its key rate to a record-high 4 per cent.

Those high prices have been poison for consumer spending, draining household finances with added costs for necessities such as food, heat and electricity. But with inflation now down to 4.3 per cent, analysts expect the ECB to hold off on more hikes during its meeting in Athens.

It is one of the bank’s regular meetings away from its Frankfurt headquarters, meant to underline its status as a European Union institution. Now, worries are sharpening about weakening economic growth and even the risk of a recession.

Rate hikes are a central bank’s chief weapon against inflation, but they can weigh on economic growth by raising the cost of credit for consumer purchases, particularly homes, and for companies to buy new equipment and facilities. Surveys of purchasing managers by S&P Global indicate that economic activity fell in October.

The war in the Middle East has threatened to raise oil prices, though there hasn't been a massive spike or an interruption in supplies so far.

(KNN Bureau)