ECB holds rates steady, vows continued fight against inflation

The European Central Bank (ECB) kept interest rates unchanged as expected on Thursday, giving no hints about its next move. The ECB argued that domestic price pressures remain high and inflation will be above its target well into next year.

In June, the ECB decided to cut rates from record highs in a move that even some of its policymakers considered rushed after progress on lowering inflation to its 2 per cent target stalled. With domestic inflation remain stubbornly high and wage growth sticky, the ECB is likely to be more cautious about any upcoming move.

“The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.25 per cent, 4.50 per cent, and 3.75 per cent, respectively.” ECB statement read.

The ECB said it is determined to ensure that inflation returns to its 2 per cent medium-term target in a timely manner. It will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. It will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction. In particular, its interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.

Attribution:ECB Statement