European Central Bank keeps interest rates unchanged despite record inflation

The European Central Bank has kept key interest rates unchanged despite record rises in inflation.

The central bank's benchmark refinancing rate remains at 0%, the rate on its marginal lending facility sits at 0.25% and the rate on its deposit facility was kept at -0.5%.

The lack of action comes at a time of increased pressure on the ECB. The 19-member region has seen inflation creep up month after month, with the most recent reading hitting a record 5.1% in January.

While the bank says that higher inflation will fade throughout the year, many economists are wondering whether consumer prices will remain high for much longer. A more prolonged period of higher inflation could put the ongoing economic recovery at risk.

ECB President Christine Lagarde is set to explain the bank's latest monetary policy decision at 1.30 p.m. U.K. time.

"Higher and more persistent eurozone inflation will increase the pressure on the ECB to follow the Fed by promising a hawkish pivot," Cedric Gemehl, economist at Gavekal Research, said in a note Thursday.

"But the bottom line is that it is energy prices and supply-side constraints that are driving eurozone inflation, not excessive demand. This suggests that the ECB will continue to focus on returning monetary policy to its pre-pandemic settings, and that any swing towards outright hawkishness remains a distant prospect," he added.

This is a breaking news story and it is being updated.