The Governing Council of the European Central Bank (ECB) decided to keep the three key ECB interest rates unchanged.
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Deposit rate: 4.0% (consensus: 4.00%; previously: 4.00%)
Inflation is expected to remain high for an extended period, with strong domestic price pressures. Few changes in the statement, but no adjustment of any kind in terms of other programs like PEPP or TLTRO. The euro is trying to rebound after today's decision, although the movements are minimal.
Information from the official press release:
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Impact of Interest Rate Increases: Previous interest rate hikes are being effectively transmitted into financing conditions, which is reducing demand and helping to lower inflation.
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Inflation Target: The Council aims to return inflation to its 2% medium-term target promptly. The current key ECB interest rates are believed to be at levels that will significantly contribute to this goal if maintained for a sufficient duration.
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Data-Dependent Approach: Future decisions on interest rates will depend on the assessment of the inflation outlook, considering economic and financial data, underlying inflation dynamics, and the strength of monetary policy transmission.
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Current Key ECB Interest Rates: Rates for the main refinancing operations, marginal lending facility, and deposit facility remain at 4.50%, 4.75%, and 4.00% respectively.
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Asset Purchase Programme (APP) and Pandemic Emergency Purchase Programme (PEPP): The APP portfolio is gradually decreasing as principal payments from maturing securities are no longer reinvested. The Governing Council plans to reinvest principal payments from maturing PEPP securities until at least the end of 2024, managing the PEPP portfolio's future roll-off to support the appropriate monetary policy stance.
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Refinancing Operations: The Council will regularly review how banks' repayment of borrowed amounts under targeted longer-term refinancing operations affects the ECB's monetary policy stance.
source: xStation 5
