MercoPress, en Español

Montevideo, February 23rd 2024 - 16:00 UTC

 

 

ECB leaves interest rates unchanged for the first time since July 2022

Tuesday, October 31st 2023 - 09:03 UTC
Full article
ECB President Christine Lagarde pointed to a “broad based” decline in inflation to 4,3% in September, with fuel costs dropping and spikes in food prices easing ECB President Christine Lagarde pointed to a “broad based” decline in inflation to 4,3% in September, with fuel costs dropping and spikes in food prices easing

The European Central Bank, ECB left interests rates unchanged for the first time in more than a year at a meeting in Athens last Thursday. ECB said it would leave key rates unchanged at between 4 and 4.75%.

“The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.50%, 4.75% and 4.00% respectively,” read a statement released by the bank.

In her press conference ECB President Christine Lagarde pointed to a “broad based” decline in inflation to 4,3% in September, with fuel costs dropping and spikes in food prices easing. She reiterated that high rates would help drive back inflation to the bank’s goal of 2% if “maintained for a sufficiently long duration.”

However she would not say how long that might take but told reporters in Athens, that “even having a discussion on cuts is totally, totally premature.”

Lagarde also did not rule out further rate increases, depending on how the fight against inflation progresses, saying, “I am not going to pass a judgment to say we are at peak.”

The ECB has raised the lending rate ten times since July 2022, in an effort to halt surging inflation, which peaked at 10.6% in Europe in October of last year but has since dropped to 4,3%.

The ECB sets monetary policy for the 20 countries of the euro zone. It said data suggests its policies are working and gave the bank confidence that inflation would eventually be brought down to its target of 2%.

“The Governing Council's past interest rate increases continue to be transmitted forcefully into financing conditions,” read the ECB statement, “This is increasingly dampening demand and thereby helps push down inflation.”

The ECB's position mirrors the approach of the US Federal Reserve and the Bank of England in holding steady.

Euro zone countries have been battered by inflation and the effects of Russia's war in Ukraine, which pushed energy, food and electricity prices higher, stifling consumer spending as households have watched their savings melt away.

Now, on the heels of the corona-virus pandemic, supply chain shortages and the war in Russia, sluggish earnings numbers across the bloc suggest a risk of recession. On top of that, fears of a widening conflict across the Middle East have spooked investors concerned about what that could mean for oil supply. In Europe, third-quarter earnings reports have been dismal as prior interest rate hikes have smothered growth.

The EU will publish its third-quarter figures on Tuesday, but markets are already losing ground as the bloc looks likely to post anemic numbers.

Categories: Economy, International.

Top Comments

Disclaimer & comment rules

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!