Key ECB interest rates unchanged

The Governing Council of the European Central Bank (ECB) on Thursday decided to keep the three key ECB interest rates unchanged. The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will remain unchanged at 2.25%, 2.40% and 2.65% respectively.

The outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East. Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out.

The Governing Council said it is closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects. It said it is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term.

With Thursday’s decision, the Governing Council remains well positioned to navigate the uncertainty caused by the conflict. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.

In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.