The European Central Bank held its key deposit rate at 2 percent for a fifth consecutive meeting on Thursday, as policymakers weighed fresh geopolitical shocks and a stronger euro that could complicate the inflation outlook for the eurozone.

The ECB said that its updated assessment “reconfirms that inflation should stabilize at its 2 percent target in the medium term” and that the “economy remains resilient.”

At the same time, the central bank warned that “the outlook is still uncertain, owing particularly to ongoing global trade policy uncertainty and geopolitical tensions.”

Since the ECB last met in December, global risks have intensified. U.S. President Donald Trump threatened new tariffs — or worse — to secure control over Greenland and launched his most aggressive attack yet of the U.S. Federal Reserve, triggering a broad sell-off in the dollar.

That pushed the euro briefly to its highest level since 2021, raising concerns among some ECB policymakers that currency strength could drag inflation further below the ECB’s 2 percent target.

While data released early this week showed inflation sinking to 1.7 percent in January, the most recent ECB staff forecasts see it returning to target by 2028.

A continued appreciation of the euro, however, risks pushing inflation below target more durably and may thus require ECB action, French central bank chief François Villeroy de Galhau has warned.

The euro has eased from its $1.20 peak to around $1.1780 as of Thursday, tempering immediate concerns. But analysts said exchange-rate volatility is likely to remain elevated, with investors watching ECB President Christine Lagarde’s 2:45 p.m. CET press conference for clues on how policymakers are reassessing risks — and the outlook for rates.