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