ECB October Rate Decision: With Inflation Falling Faster, Cut Rates By 25 bps as Expected
ECB
5 hours agoThe European Central Bank Governing Council today decided to lower the three key interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 3.25%, 3.40% and 3.65% respectively. Inflation is expected to rise in the coming months, before declining to target in the course of next year.
On October 17, the European Central Bank (ECB) announced its latest monetary policy decision:
The deposit facility rate has been lowered to 3.25%, expected: 3.25%, previous reading: 3.5%.
The main refinancing operations rate has been cut to 3.4%, expected: 3.4%, previous reading: 3.65%.
The marginal lending facility rate has been cut to 3.65%, expected: 3.65%, previous reading: 4.9%.
The monetary policy stance is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. The incoming information on inflation shows that the disinflationary process is well on track. The inflation outlook is also affected by recent downside surprises in indicators of economic activity. Meanwhile, financing conditions remain restrictive.
Inflation is expected to rise in the coming months, before declining to target in the course of next year. Domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profits partially buffering their impact on inflation.
The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. It will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction. The Governing Council is not pre-committing to a particular rate path.
ECB Monetary Policy Decision
