European Central Bank maintains key interest rates

25 Jan '24

2 min read

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ECB has kept its key interest rates unchanged, with the main refinancing operations at 4.50 per cent, the marginal lending facility at 4.75 per cent, and the deposit facility at 4.00 per cent.
This decision is part of ongoing efforts to control inflation and achieve the 2 per cent medium-term target, with future adjustments based on inflation trends.

The European Central Bank (ECB) has announced that it will maintain its current key interest rates, leaving them unchanged. The main refinancing operations rate remains at 4.50 per cent, while the rates for the marginal lending facility and the deposit facility are held at 4.75 per cent and 4.00 per cent, respectively.

The Governing Council’s recent review of incoming information has largely affirmed its prior analysis, highlighting a persistent downward trend in underlying inflation despite an energy-related surge in headline inflation. Furthermore, the impact of past interest rate hikes is being effectively transmitted into the financing conditions, contributing to tighter financing circumstances. These conditions are instrumental in suppressing demand, thus aiding in the reduction of inflation rates, the council said in a media release.

With a steadfast commitment to achieving its 2 per cent medium-term inflation target, the Governing Council believes that the current interest rates, if sustained over a sufficient period, will significantly aid in reaching this goal. Future decisions will focus on maintaining policy rates at sufficiently restrictive levels for as long as necessary to ensure this objective is met.

The ECB's approach remains data-dependent, with the Council prepared to adjust the level and duration of its restrictive measures based on the evolving economic and financial landscape. Key to these decisions will be the continuous assessment of the inflation outlook, which will factor in incoming data, the dynamics of underlying inflation, and the effectiveness of monetary policy transmission, the release added.

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