European Central Bank announces interest rate decision

In a statement regarding its monetary policy decision, the European Central Bank (ECB) announced that it has kept the refinancing rate at 4.50 percent, the deposit facility rate at 4 percent, and the marginal lending facility rate at 4.75 percent.

Thus, in the third meeting of the year regarding monetary policy, the three key policy rates were kept unchanged for the fifth consecutive time, with interest rates remaining at the highest level in the history of the euro.

The ECB had raised interest rates by a total of 450 basis points in 10 consecutive meetings following July 2022.

Continuing its interest rate hikes last year, the ECB has not made any changes in the meetings held since it raised the refinancing rate to 4.50 percent at its September 2023 meeting.

In the ECB's interest rate decision statement, the phrase "The Governing Council decided today to keep the three key ECB interest rates unchanged." was used.

The statement noted that inflation continues to lose momentum due to the decline in food and product prices, and it was recorded that most of the underlying indicators for inflation have improved and wage growth is slowing.

"DOMESTIC PRICE PRESSURES ARE KEEPING INFLATION HIGH"

The statement included the assessment: "Financing conditions remain restrictive. Past interest rate increases continue to put pressure on demand. This is helping to push inflation down. However, domestic price pressures are strong and are keeping services price inflation high."

Emphasizing that the ECB is committed to achieving its 2 percent inflation target in the medium term, the statement pointed out that the key interest rates are at levels that will make a significant contribution to the ongoing inflation-fighting process.

The statement reported that the ECB Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determine the appropriate level and duration of monetary policy restriction, and will not pre-commit to a specific rate path.

Noting that the asset purchase program portfolio is declining at a measured and predictable pace, the statement conveyed that the Governing Council plans to fully reinvest the principal payments from maturing securities purchased under the pandemic emergency purchase programme during the first half of 2024, and to reduce the portfolio by an average of 7.5 billion euros per month during the second half of the year.