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 kept unchanged at 4.75 per cent and
4.00 per cent, respectively. It was the ECB’s third consecutive meeting on hold.
In its policy
statement, the ECB noted:
- Past interest
rate increases keep being transmitted forcefully into financing conditions;
- Tight
financing conditions are dampening demand, and this is helping to push down
inflation;
- 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,
maintained for a sufficiently long duration, will make a substantial
contribution to this goal;
- Governing
Council’s future decisions will ensure that its policy rates will be set at
sufficiently restrictive levels for as long as necessary;
- Governing
Council will continue to follow a data-dependent approach to determining the
appropriate level and duration of restriction;
- 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