ECB holds interest rates at record high
The European Central Bank will leave its key interest rates unchanged for the fourth time in a row, eurozone central bankers decided Thursday.
The ECB's key interest rates remain at historically high levels. The refinancing rate, which banks pay to borrow money from the ECB for a week, stands at 4.50 per cent, and the deposit rate remains at 4 per cent.
Since July 2022, the central bank has decided to fight skyrocketing inflation with ever-higher interest rates, after a long period in which the deposit and refinancing rates had dropped to zero or even lower.
After ten consecutive rate hikes, the ECB decided to leave rates unchanged for the first time at the end of October. The main question now is when the ECB will start lowering rates again.
"Domestic price pressures remain high, in part owing to strong growth in wages”
ECB president Christine Lagarde has stressed several times recently that it is too early to discuss rate cuts. Meanwhile, the ECB has lowered its inflation forecast for 2024 to 2.4 per cent from 2.7 per cent.
“Although most measures of underlying inflation have eased further, domestic price pressures remain high, in part owing to strong growth in wages,” the ECB said Thursday.
The central bank stressed that the current high interest rates are helping to keep inflation low and pushing it towards its medium-term target of 2 per cent.
The ECB also lowered its expectations for economic growth in the eurozone to 0.6 per cent by 2024. Previously, the institution had forecast economic growth of 0.8 per cent.
ECB president Christine Lagarde © Photo Kirill KUDRYAVTSEV / AFP
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