Finance Associated Press, December 14 (edited by Xia Junxiong).On Thursday (December 14) local time, the European Central Bank (ECB) kept interest rates unchanged as expected and lowered its inflation forecasts, reiterating that it will maintain restrictive interest rates if necessary.
This is the second time in a row that the ECB has kept interest rates unchanged, with the three key interest rates being the main refinancing rate, the marginal lending rate and the deposit facility rate75% and 400%。Since the end of the negative interest rate policy in July last year, the European Central Bank has raised interest rates 10 times in a row, with a cumulative increase of 450 basis points.
In its statement, the ECB reiterated that the Governing Council will set interest rates at sufficiently strict levels for as long as necessary.
The ECB said inflation has slowed further in recent months but is likely to pick up in the near term. They expect the Consumer Index** (CPI) to slow down to a target level of 2% within two years.
According to the ECB, headline inflation averages 54% and 2 in 20247% and 2 in 20251% and 1 in 20269%。"This equates to a downward revision for 2023 and especially for 2024 compared to the ** for staff in September," the report said.
Given the weakening outlook for the Eurozone, the ECB has taken economic growth from 0 this year7% to 06%, lowering next year's growth** from 1% to 08%。
The ECB also announced that it will end the reinvestment program of the Emergency Pandemic Purchase Programme (PEPP) ahead of schedule, cutting €7.5 billion per month from July next year until it is completely withdrawn by the end of next year.
Ahead of the ECB's interest rate decision, the market expects the central bank to cut interest rates as early as March next year. The latest data showed that headline inflation in the eurozone fell to 24%, the lowest level in more than two years.
However, traders trimmed bets on a rate cut by the ECB following the announcement of the interest rate decision.
Lagarde: There was no talk of a rate cut
At a press conference after the meeting, ECB President Christine Lagarde once again tried to extinguish market hopes for a rate cut in the first half of next year.
Lagarde said that policymakers did not discuss interest rate cuts at all at the monetary policy meeting and warned that policymakers should not let their guard down when it comes to fighting inflation.
Carsten Brzeski, an economist at ING, commented that the ECB has only made a very small shift to its position, abandoning its previous view that inflation in the eurozone is expected to remain too high for a long time.
Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said: "If the Fed cuts interest rates earlier and faster, it will be difficult for the ECB to hold its ground. ”
The Federal Reserve kept interest rates unchanged on Wednesday but signaled that there could be three rate cuts next year. The Fed's dot plot expects a 75 basis point rate cut in 2024.
Finance Associated Press Xia Junxiong).