The European Central Bank did not change key interest rates. This decision coincided with the expectations of analysts and market participants. The base rate on loans is 4.25%, the rate on deposits is 3.75%, the rate on margin loans is 4.5%, the ECB recalled.
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Position of the ECB
The regulator’s management noted that they will continue to monitor incoming statistical data and make decisions on rates at each meeting separately, and also that the ECB does not have a predetermined plan regarding a specific rate level in the future.
Recent data are generally consistent with the regulator's medium-term inflation forecast. Most inflation factors remained stable or fell in June, with price pressures in the euro area remaining high, services inflation elevated, and headline inflation likely to remain above target for much of next year, it said. p>
“The ECB’s Governing Council is firmly committed to achieving a timely slowdown in inflation to the medium-term target of 2%. We will keep key rates at a fairly restrictive level for as long as necessary to achieve this goal,” the bank said in a statement.
“Decisions on rates will be based, in particular, on assessments of the inflation forecast in light of incoming economic and financial data and core inflation dynamics,” says the press release.
The regulator confirmed its intention to reduce its portfolio of securities purchased under the pandemic emergency purchase program (PEPP) by an average of 7.5 billion euros per month. The ECB plans to stop reinvesting PEPP proceeds at the end of 2024.
Meanwhile, the portfolio of securities purchased under the asset repurchase program (APP) is declining at a moderate and predictable rate, as the regulator no longer reinvests proceeds from redeemed securities .
The ECB management is ready to adjust all instruments within its mandate to ensure inflation returns to the target 2%, the press release notes.
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