ECB rates unchanged after the Governing Council left its three key interest rates at current levels on Thursday. The deposit facility stayed at 2.25%. Meanwhile, the main refinancing rate held at 2.40%, and the marginal lending rate remained at 2.65%.
The council said energy prices remain highly volatile. However, it said the current outlook is close to the baseline in the June Eurosystem staff projections. It also said prices remain well above levels seen before the conflict in the Middle East.
The ECB said uncertainty remains high. Therefore, it is watching the size and length of the energy shock, along with indirect and second-round effects. It repeated that policy will aim to make sure inflation settles at its 2% target over the medium term.
ECB Rates Unchanged Amid High Uncertainty
The council said it remains well placed to deal with uncertainty linked to the conflict. Meanwhile, it said it will keep using a data-dependent and meeting-by-meeting approach when setting policy. Rate decisions will depend on its view of the inflation outlook, the risks around that outlook, incoming economic and financial data, underlying inflation, and the strength of policy transmission.
It also said it is not committing in advance to any specific rate path. That language signals the council wants to keep flexibility as new data arrives. The statement did not announce any change to its broader policy tools.
Asset Portfolios Keep Declining
The ECB said the APP and PEPP portfolios are still shrinking at a measured and predictable pace. That is because the Eurosystem no longer reinvests principal payments from maturing securities. In addition, the council said it stands ready to adjust all of its tools within its mandate if needed.
It repeated that the Transmission Protection Instrument remains available. The tool can counter unwarranted and disorderly market moves that threaten monetary policy transmission across euro area countries. The ECB President will explain the thinking behind the decisions at a press conference scheduled for 14:45 CET.
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Source: InvestingLive
