The Governing Council of the European Central Bank agreed at its meeting this Thursday to keep the three official interest rates unchanged. In this way, just as last septemberthe rate applicable to the deposit facility remains at 2.00%, that of the main financing operations at 2.15% and that of the marginal credit facility at 2.40%. According to the statement, the decision is justified because “inflation continues at levels close to the 2% objective in the medium term” and because “the assessment of inflation prospects has practically not changed.”
The organization chaired by Christine Lagarde, has highlighted that the eurozone economy has continued to grow “despite the difficult international environment.” The entity points out that this is due, in part, to “the strength of the labor market, the strength of the private sector’s balance sheets and previous reductions in interest rates.”
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However, the ECB warns that “the outlook is still uncertain,” noting that the main risk factors are “the current international trade conflicts and geopolitical tensions.” Therefore, the Governing Council will maintain an approach of continuous and data-dependent surveillance, where “decisions are made at each meeting” and are based on the assessment of the inflation outlook, the associated risks and “the intensity of the transmission of monetary policy.”
Furthermore, the institution makes it clear, as on other occasions, that “it does not commit in advance to any specific rate path,” underlining the need for flexibility in the face of a changing environment.
Reiterates its goal of reaching 2% inflation
The European body reiterates its determination to ensure that inflation stabilizes at the 2% objective in the medium term and affirms that it is prepared to “adjust all its instruments within the framework of its mandate”, if conditions require it.
Likewise, it recalls that the Transmission Protection Instrument (TPI) remains operational, which allows the Governing Council to act in the event of “unwanted or disorderly market dynamics that constitute a serious threat to the transmission of monetary policy” in the countries of the euro zone.
It has also reported that the gradual reduction of the Asset Purchase Program (APP) and the Pandemic Emergency Purchase Program (PEPP) continues. According to the statement, this decrease occurs “at a measured and predictable pace,” following the Eurosystem’s decision to stop reinvesting the principal of maturing securities.