The Governing Council of the European Central Bank (ECB) has decided to maintain its three key interest rates, citing information that supports its prior evaluation of the medium-term inflation outlook.
According to an ECB press release, these three key interest rates include the main refinancing operations rate, the marginal lending facility rate, and the deposit facility rate. These rates will persist at 4.50%, 4.75%, and 4.00% respectively.
The ECB noted in a press release, "Aside from an energy-related upward base effect on headline inflation, the declining trend in underlying inflation has continued, and the past interest rate increases keep being transmitted forcefully into financing conditions." The bank also stated that tight financing conditions have reduced demand, subsequently slowing inflation.
The ECB Governing Council has initiated measures to steer inflation towards its 2% medium-term target as per the same press release. The council maintains that by preserving these key interest rates over an adequate duration, it can achieve this goal. The council will persist in employing a data-dependent approach when deciding on the restriction level and duration.
In another statement from the press release, ECB said: "The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission."