The European Central Bank's Governing Council held its key deposit rate steady at 2.00 percent following the April 30 meeting, citing intensified upside risks to inflation from elevated energy prices tied to the Middle East conflict. Latest staff projections place average headline inflation at 2.6 percent for 2026, well above the 2 percent target, with core measures also revised higher amid supply disruptions and second-round effects. Bloomberg economist surveys now anticipate two 25-basis-point hikes by September, aligning with market pricing that has shifted away from any easing this year. Officials including Isabel Schnabel and Piero Cipollone have described a June tightening as increasingly likely, while recent data showing resilient labor markets and contained growth have reduced the case for accommodation. Traders assign an 88 percent probability against a rate cut, reflecting the data-dependent path and absence of near-term disinflation signals.