The European Central Bank (ECB) left its three key interest rates unchanged on Thursday, warning that rising energy prices pose upside risks to inflation and downside risks to economic growth.

The decision keeps the benchmark deposit facility rate at 2.5%, the main refinancing operations rate at 2.65% and the marginal lending facility rate at 2.9%, the bank said in a statement.

"While the full effects of the energy shock are still unfolding, underlying inflation has remained broadly stable so far and wages do not show a material response at this stage," the Governing Council said.

"The increased magnitude and duration of the energy shock, as well as the implications for indirect and second-round effects, are likely to drive up inflation and lower growth," it added.

The central bank noted that financing conditions have tightened since its previous policy meeting, which is expected to weigh on both price pressures and economic expansion.

Reiterating its commitment to ensuring inflation stabilizes at its 2% medium-term target, the bank emphasized that it is not pre-committing to a specific interest rate path.

"The Governing Council remains well positioned to navigate the current elevated uncertainty," the statement said, confirming that policymakers will maintain a data-dependent, meeting-by-meeting approach based on incoming economic and financial data.

The bank also confirmed that its asset purchase program and pandemic emergency purchase program portfolios continue to decline at a measured and predictable pace, as the Eurosystem no longer reinvests principal payments from maturing securities.