The European
Central Bank (ECB) left its main refinancing rate unchanged at 4.50 per cent on
Thursday, as widely anticipated. The ECB’s interest rates on the marginal
lending facility and the deposit facility were also remained unchanged at 4.75 per cent and 4.00 per cent, respectively. It was the ECB’s fifth consecutive
meeting on hold. T
In its policy
statement, the ECB noted:
- Incoming
information has broadly confirmed Governing Council’s previous assessment of
the medium-term inflation outlook;
- Most measures
of underlying inflation are easing, wage growth is gradually moderating, and
firms are absorbing part of the rise in labour costs in their profits;
- But domestic
price pressures are strong and are keeping services price inflation high;
- Governing
Council is determined to ensure that inflation returns to its 2% medium-term
target in a timely manner;
- Governing
Council considers that the key ECB interest rates are at levels that are making
a substantial contribution to the ongoing disinflation process;
- Governing
Council’s future decisions will ensure that its policy rates will stay
sufficiently restrictive for as long as necessary;
- If Governing Council’s updated assessment of the inflation
outlook, the dynamics of underlying inflation and the strength of monetary
policy transmission were to further increase its confidence that inflation is
converging to the target in a sustained manner, it would be appropriate to
reduce the current level of monetary policy restriction;
-
Governing Council will continue to follow a data-dependent and
meeting-by-meeting approach to determining the appropriate level and
duration of restriction, and it is not pre-committing to a particular rate
path;
- Governing
Council stands ready to adjust all of its instruments within its mandate to
ensure that inflation returns to its 2% target over the medium term and to
preserve the smooth functioning of monetary policy transmission