As expected, the European Central Bank kept interest rates unchanged at today’s board meeting in Ghent, as reported by ot.gr.
Interest rates were last raised in September 2023 in the upward cycle that began in July 2022, with the deposit rate reaching 4%. In the next three meetings, the ECB consistently reiterated that interest rates would remain steady for a significant period of time in order to contribute to a steady reduction in inflation, calling any talk of easing monetary policy premature.
In its announcement the central bank acknowledges that inflation has fallen further since the last session. ECB experts revised down their forecasts for inflationary pressures, mainly due to energy prices.
“According to the projections,” the announcement emphasizes, “inflation is now expected to average 2.3% in 2024, 2% in 2025 and 1.9% in 2026. The projections for inflation excluding energy prices and food prices have also been revised downward to average 2.6% in 2024, 2.1% in 2025 and 2% in 2026. Although most measures of core inflation have weakened further, domestic price pressures remain high, partly due to strong wage growth”
Estimates of growth in the eurozone
ECB economists have revised down forecasts for growth, which is expected to move to 0.6% and economic activity to remain subdued. The recovery will return in 2025 and move to a pace of 1.5% and 1.6% in 2026, first from consumption and later also from investment.
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