ECB Interest Rate Decision Announced: Sticking to Economic Targets

ECB Does Not Change Interest Rates

The European Central Bank (ECB) Governing Council announced that it has decided not to make any changes to the three key interest rates during its meeting. It was observed that inflation continues to hover around the 2 percent target in the medium term. The Governing Council emphasized that there is no significant change in the overall outlook for price stability, providing reassurance to investors.

Economic Resilience Continues

The Governing Board stated, "Despite challenging global conditions, the euro area economy continues to grow." It was noted that a strong labor market, solid private sector balance sheets, and past interest rate cuts support economic resilience. However, it was highlighted that factors such as global trade disputes and geopolitical tensions have created uncertainty in the economic outlook.

Inflation Target and Monetary Policy

The ECB reiterated its commitment to maintaining inflation at a stable 2 percent level in the coming period, expressing that interest rate decisions will be shaped by the inflation outlook, risks, economic and financial data, and core inflation dynamics at each meeting. It also indicated that the current policy framework will not adhere to any predetermined interest rate path.

Programs and Gradual Reduction

The Governing Council decided to keep the deposit rate at 2 percent, the main refinancing rate at 2.15 percent, and the marginal lending rate at 2.40 percent. Additionally, it was announced that the portfolios would continue to decrease at a foreseeable pace as a result of the reinvestment of the principal of maturing securities being directed away from the asset purchase program (APP) and the pandemic emergency purchase program (PEPP).

ECB's Intervention Tools Active

The bank reported that it is ready to take necessary steps against irregular market movements threatening the transmission of monetary policy in the euro area within the framework of the Transmission Protection Instrument.