ECB keeps eurozone interest rates unchanged for fourth time in a row

ECB interest rates in the eurozone will remain unchanged for the fourth time in a row since October, the institution said this Thursday.

The deposit rate remains at 4%, the highest level recorded since the introduction of the single currency in 1999, while the main refinancing interest rate remains at 4.5% and the rate applicable to the margin lending facility. remains at 4.75%.

The ECB stresses that since its last meeting in January, inflation has registered a further decline and that inflation has been revised downwards, especially for 2024, in forecasts published this Thursday, largely reflecting a smaller contribution from energy prices.

However, it indicates that while most measures of core inflation recorded a further slowdown, “domestic pressures on prices remain high, partly due to strong wage growth.” “Funding conditions are restrictive and previous interest rate hikes continue to put pressure on demand, which helps keep inflation down,” he says.

The Governing Council reiterates that it is “determined to ensure that inflation returns to the medium-term target of 2% in a timely manner.”

“Based on its current assessment, the Governing Council considers that the ECB’s key interest rates are at levels that, if maintained for a sufficiently long period, will make a significant contribution to achieving this goal,” it said.

The institution confirms that it will continue to take a data-driven approach to future decisions.

With regard to the Asset Purchase Program (APP), we would like to remind you that during the first half of the year it intends to continue to fully reinvest capital payments on maturing securities purchased under the PEPP (Pandemic Emergency Purchase Program) into while in the second half of the year it intends to reduce the PEPP portfolio by an average of 7.5 billion euros per month.

After raising rates tenfold since mid-2022, taking them to their highest level ever, the ECB decided to take a “pause” at its latest meetings before easing monetary policy.

When the ECB changes key interest rates, this is reflected throughout the economy, affecting, for example, bank loans, general market loans, home loans, interest rates on bank deposits or other investment instruments.