ECB leaves its key interest rates unchanged, as widely expected

The European Central Bank (ECB) held its main refinancing rate unchanged at 4.25 per cent on Thursday. The ECB’s interest rates on the marginal lending facility and the deposit facility were also left unchanged at 4.50 per cent and 3.75 per cent, respectively. The outcome was widely expected after a 25-basis-point rate cut at the central bank’s previous meeting, which was the first policy easing since 2019.

In its policy statement, the ECB noted:

- Monetary policy is keeping financing conditions restrictive;

- However, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year;

- Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner;

- Governing Council will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim;

- Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction;

- Governing Council is not pre-committing to a particular rate path;

- Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term