The European Central Bank (ECB) is expected to keep interest rates unchanged at today’s meeting, as it assesses the scale of the inflationary shock that the war in Iran may cause.

The deposit rate is expected to remain at 2% today (Thursday) — the level it has been at since last June — according to a unanimous Bloomberg survey. While most economists believe borrowing costs will stay at this level until the end of the year, investors are betting on at least one rate hike.

Conflicts in the Middle East are raising fears that a new wave of inflation will follow the sharp price increases seen in 2022 — a prospect that is high on the agenda as the world’s major central banks meet this week.

A Bloomberg survey showed that only 7% of respondents expect a move by December, and fewer than one-third foresee any tightening by the end of next year. This contrasts with market expectations, which price in a 0.25% increase in the deposit rate to 2.25% by July, with a 75% probability of another rise to 2.5% by the end of the year.

The duration of the war with Iran remains at the center of the debate, with respondents generally predicting that the conflict will be short-lived.