The ECB follows the script and maintains interest rates

Jul 18 () –

The Governing Council of the European Central Bank (ECB) has decided on Thursday to keep interest rates unchanged, with the reference rate for its refinancing operations remaining at 4.25%, the deposit rate at 3.75% and the lending rate at 4.50%.

In this way, as the consensus of analysts expected, the ECB is pausing the rate adjustment it began at its meeting last June, when it lowered the price of money by 25 basis points.

In a statement, the institution stressed that the most recent information broadly supports the Governing Council’s previous assessment of the medium-term inflation outlook.

In this regard, he pointed out that, although some underlying inflation indicators rose in May due to transitory factors, most remained stable or fell in June.

In line with expectations, the ECB also notes that the inflationary impact of high wage growth has been absorbed by profits.

“Monetary policy remains under restrictive financing conditions,” the ECB said.

At the same time, domestic inflationary pressures remain high, services inflation is elevated and headline inflation is likely to remain above target well into next year.

The central bank has thus assured that the Governing Council is determined to ensure that inflation returns to its medium-term target of 2% soon, and will maintain official interest rates at sufficiently restrictive levels for as long as necessary to achieve this objective.

To this end, the Governing Council will continue to apply a data-driven approach, with decisions taken at each meeting, to determine the appropriate level of restriction and its duration.

In particular, the ECB has stressed that its interest rate decisions will be based on its assessment of the inflation outlook taking into account new economic and financial data, underlying inflation dynamics and the intensity of monetary policy transmission, without committing in advance to any particular rate path.

The ECB’s interest rate decision comes a day after Eurostat confirmed that the eurozone inflation rate stood at 2.5% year-on-year in June, one-tenth below the rise in prices seen in May, although the rise in the cost of services remained stable at 4.1%, as did the reading of 2.9% for the underlying inflation rate.