The ECB also decided to keep the cost of money stable after a similar decision by the Fed yesterday evening. The rate on main refinancing remains unchanged at 4.50%, that on deposits at 4%, and that on marginal loans at 4.75%. . It is the second consecutive pause in the cycle of increases that began in July 2022.
This morning the Bank of England (BoE) also left British interest rates unchanged at 5.25%, for the second month in a row and after 14 consecutive increases adopted with an anti-inflation aim. Similar decision by the Swiss Central Bank (BNS) which left rates unchanged at 1.75%.
Attention now shifts to next year when the market is already pricing in a series of cuts in the cost of money.
“Inflation, although it has decreased in recent months, will probably return to a temporary increase in the short term,” says the ECB. “According to the latest projections for the euro area, it is expected to decline gradually over the next year, before approaching the Governing Council’s target of 2% in 2025.
Overall, experts expect overall inflation to average 5.4% in 2023, 2.7% in 2024, 2.1% in 2025 and 1.9% in 2026. Compared to the September financial year, the projections for 2023 and especially for 2024 were revised downwards.”
For further information Agenzia ANSA Towards firm ECB rates, but the market is already looking to 2024 – News – Ansa.it First decline in mortgages for 24 months. (HANDLE)
Lagarde: ‘We didn’t talk about cutting rates. There is still work to be done, let’s not let our guard down’
“We didn’t talk about rate cuts at all,” said the president of the ECB, Christine Lagarde, at the end of the Governing Council meeting when asked about the market’s expectations for a reduction in the first half of 2024. On inflation ” should we let our guard down? We asked ourselves. No, we absolutely shouldn’t”, he added, explaining that the ECB remains “dependent on data” and that we need more data on underlying inflation which will arrive in the coming months, because there is a component that is struggling to decline.
“We don’t believe it’s time to let our guard down, there is still work to be done and so we wait,” Lagarde continued. The president reiterated that rates will remain at a sufficiently restrictive level for as long as necessary. “Some data plays a significant role,” and when it arrives “it will tell us whether it is time to let our guard down,” she added.
“The PEPP (pandemic bond purchase programme) has served its purpose – he said -. The pandemic is over, and the normalization of the ECB’s balance sheet is welcome. We do not see a risk of fragmentation (of the euro area markets ed. ) but the risk is there and to counter it there are tools that we will not hesitate to use, because the good transmission of monetary policy is part of politics itself”.
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2023-12-14 14:42:00
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