ECB holds its three key rates, with the deposit rate at 2.50%
The European Central Bank left the deposit facility at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90% on Oct. 29. It said it is not pre-committing to a rate path.
Last updated
Not investment advice. Read the disclaimer.
The European Central Bank’s Governing Council decided on Oct. 29 to leave its three key interest rates unchanged. In the decision published that day, the deposit facility stays at 2.50%, the main refinancing operations at 2.65%, and the marginal lending facility at 2.90%. The statement does not set a date for the next change. A hold is the Council’s decision. It is not a view on borrowing or on the euro.
The Council said energy prices have continued to rise, which it described as an upside risk to the inflation outlook and a downside risk to growth. It said the full effects of that energy shock are still unfolding, that underlying inflation has stayed broadly stable so far, and that wages do not show a material response at this stage. It also said a larger and longer energy shock, including indirect and second-round effects, is likely to push inflation up and growth down, and that tighter financing conditions since the previous meeting are likely to weigh on both. Those likelihoods are the Council’s assessment, not a forecast added here.
The Council said it will keep setting policy so that inflation stabilises at its 2% target in the medium term. It said it remains in a position to deal with elevated uncertainty and will decide meeting by meeting, using the inflation outlook, the risks around it, incoming data, underlying inflation, and how policy is transmitting. It said it is not pre-committing to a particular rate path.
The asset purchase programme and the pandemic emergency purchase programme portfolios are declining at a measured pace because the Eurosystem no longer reinvests principal from maturing securities, the statement says. The Council said it can adjust its instruments within its mandate, and that the Transmission Protection Instrument remains available if unwarranted and disorderly market moves seriously threaten how policy passes through across euro-area countries. That is a description of an existing tool. It is not a statement that the tool will be used.
More in Economy.