The Bank held its policy interest rate unchanged on Thursday and said it is prepared to raise rates if the ongoing Iran conflict intensifies. In an accompanying statement the institution said it expects the broader economy to grow more than in its previous projection for the year, but warned that uncertainty linked to the regional hostilities remains a material downside risk.
Officials framed the decision as a cautious balance between current domestic momentum and external threats. The statement noted that recent indicators supported an upward revision to the year’s growth outlook, without providing a detailed numerical update in the announcement. The central bank said it will continue to monitor incoming data on activity, labour markets and price developments when assessing the appropriate policy stance.
The bank also signalled conditional readiness to tighten policy if the conflict around Iran escalates. It described the possibility of an intensified regional confrontation as a scenario that could alter inflationary and financial conditions, and therefore one that would require monetary-policy adjustments. The institution did not specify timing or the magnitude of any potential future moves, reiterating that decisions will depend on how the situation and economic indicators evolve.
Market participants and policymakers will now watch for forthcoming economic releases and for any changes in the security environment that could prompt a policy response. The central bank’s statement underscored a preference for data-dependence, with officials indicating they remain prepared to act to fulfil their mandate amid the combination of a stronger-than-expected growth outlook and ongoing geopolitical uncertainty.
