The European Central Bank (ECB) held its deposit facility, main refinancing operations and marginal lending facility rates at 2.50%, 2.65% and 2.90%, respectively, as rising energy prices posed upside risks to inflation and downside risks to growth. The deposit rate had risen from 2.00% through 25-basis-point increases in June and September. The Eurosystem continued to reduce its asset purchase programme and pandemic emergency purchase programme portfolios at a measured, predictable pace, without reinvesting principal payments from maturing securities. Underlying inflation remained broadly stable and wages showed no material response to the energy shock so far, while tighter financing conditions were expected to weigh on inflation and growth. The increased magnitude and duration of the energy shock, including its indirect and second-round effects, were likely to push inflation higher and weaken growth. The ECB’s Governing Council reiterated its commitment to stabilising inflation at its 2% medium-term target and said decisions would remain data-dependent and meeting-by-meeting, without pre-committing to a rate path.
European Central Bank Holds Policy Rates Unchanged; Deposit Rate at 2.50%
The European Central Bank held its deposit facility, main refinancing operations and marginal lending facility rates at 2.50%, 2.65% and 2.90%, respectively, as rising energy prices posed upside risks to inflation and downside risks to growth. It reaffirmed its 2% medium-term inflation target and data-dependent, meeting-by-meeting approach, without pre-committing to a rate path.