ECB keeps interest rates unchanged 'for as long as necessary'
The European Central Bank is leaving interest rates unchanged for the third time in a row, the Governing Council decided on Thursday. As the ECB reaffirmed its commitment to fighting inflation, interest rates remain at record highs.
The refinancing rate, the rate banks pay to borrow money from the ECB, is set at 4.5 per cent. The deposit rate - the interest rate banks receive when they park excess cash at the ECB for a short time - is at 4 per cent.
The ECB's Governing Council says that current inflation trends are "broadly" consistent with its previous assessment. While there is an upward effect from energy prices, underlying inflation remains on a downward trend. "Previous interest rate hikes continue to have a powerful impact on financing conditions. Tight financing conditions dampen demand and this helps push inflation down," the ECB said in a press release.
""Previous interest rate hikes continue to have a powerful impact. Tight financing conditions dampen demand and this helps push inflation down"
The ECB's inflation target remains unchanged at 2 per cent over the medium term. "The Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal," the bank said. "The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary."
© PHOTO JOHN MACDOUGALL / AFP