• 20/06/2024 09:05

The ECB kept key interest rates at record highs

The European Central Bank (ECB) left all three key interest rates unchanged. The base rate on loans was left at 4.5%, the rate on deposits at 4%, the rate on margin loans at 4.75%. This was reported by the regulator's press service.

The ECB kept key interest rates at a record high

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“Most core inflation indicators are declining, wage growth is gradually slowing, and some of the increase in labor costs is being absorbed in corporate profits,” it said.

Constrictive fiscal conditions and past rate hikes continue to restrain demand, which contributes to a weakening in the growth rate of consumer prices, the ECB notes.

“The Governing Council of the ECB is firmly committed to bringing inflation back to its medium-term target of 2%. The Board believes that key rates are at a level that makes a significant contribution to the current process of disinflation,” says the press release.

The regulator will continue to take an approach in which decisions on the level of rates and the duration of maintaining restrictive policy are determined by incoming statistical data and are accepted from meeting to meeting, and will not be committed in advance to any betting trajectory.

“If the Board of Governors’ updated assessment of the inflation outlook, underlying inflation dynamics and the degree of monetary policy transmission continue to increase its confidence that inflation is sustainably returning to target, it would be appropriate to reduce the current level of monetary policy constraints,” – the ECB said.

The report also states that the portfolio of securities purchased by the ECB under the asset repurchase program (APP) is declining at a moderate and predictable pace, since the regulator is no longer reinvesting proceeds from redeemed securities.

The European regulator plans to continue reinvesting the full amount of proceeds from the redemption of securities purchased under the pandemic emergency purchase program (PEPP) in the first half of 2024.

From the second half of the year, the ECB intends to begin reducing portfolio of securities purchased under PEPP for an average of 7.5 billion euros per month.

The regulator plans to stop reinvesting proceeds under PEPP at the end of 2024.

The ECB's leadership is ready to adjust all instruments within its mandate to ensure inflation returns to the target 2%.


The European Central Bank has been tightening monetary policy since July 2022 to combat the accelerating inflation, which jumped above 10% in October 2022. Until this point, the rate on deposits was negative (-0.5%), the base rate was 0%, and on margin loans – 0.25%.

The regulator consistently increased interest rates at ten consecutive meetings. By September 2023, the interest rate had risen to 4.5%, the margin lending rate to 4.75% and the deposit rate to 4%. Since then, the ECB has kept rates at the same level.

According to preliminary Eurostat estimates, inflation in 2024 continues to decline: from an annual rate of 2.6% in February to 2.4% in March, which is slightly higher ECB target of 2%. In January, the figure was 2.8%.

Economists polled by Reuters forecast inflation in the eurozone in 2024 at 2.3%.

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