The European Central Bank (ECB) is expected to keep interest rates unchanged this Thursday, easing expectations of rapid rate cuts as inflation falls.
After raising interest rates to their highest level ever, the ECB marks a pause in an unprecedented tightening cycle that has seen rates rise ten times since mid-2022.
For the third time since October, unsurprisingly, at the end of the ECB’s first Council meeting of the year on the 41st floor of the institution’s tower in Frankfurt, an announcement is due to be made that it has decided to keep three key interest rates unchanged. .
Representatives of the central banks that are members of the ECB have made it clear in their latest statements, especially during the Davos forum last week: the chances of the Frankfurt institution easing monetary policy before the summer are slim.
It was this horizon that ECB President Christine Lagarde referred to, who considered rate cuts “likely” during this period, while insisting on the importance of future “data” on the evolution of prices or wages.
The ECB remains cautious in the context of multiple crises, paying particular attention to less predictable energy prices in the context of the war between Israel and Hamas and the Red Sea crisis, which is also increasing transport costs.
The interest rate applicable to the main refinancing transactions and the interest rates applicable to the margin lending facility and standing deposit facility are set at 4.50%, 4.75% and 4.00%, respectively.
The high cost of money has slowed the financing of the economy, limiting demand for credit and, by extension, for goods and services, helping to control prices that have risen sharply due to the impact of the war in Ukraine on the cost of gas and oil.
In December, consumer price growth for the year reached 2.9% in the eurozone, a far cry from the peak of 10.6% reached in October 2022. However, for statistical purposes this represents a small jump from inflation of 2.4%. recorded in November.
In the United States, where markets are eyeing a first rate cut in March, US Federal Reserve (Fed) officials also softened expectations, indicating more work remains to be done to bring inflation back to its 2% target.
Author: Lusa
Source: CM Jornal
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