The ECB has not changed its interest rates: inflation could still rebound

“The Governing Council has decided to keep the ECB’s three interest rates unchanged. Although inflation has slowed in recent months, it is likely that its pace will temporarily accelerate in the near future,” said the ECB in a press release.

The interest rates for using the deposit option, main refinancing operations and marginal borrowings remain at 4.00% and 4.50%, respectively. and 4.75 percent.

The Frankfurt-based institution forecasts that general inflation in the euro zone will reach the target of 2 percent. will reach this level only in 2025, and this year the average indicator will be 5.4 percent, in 2024 – 2.7 percent. and will fall to 1.9 percent in 2025. In September, the ECB forecast higher average annual inflation: 5.6, 3.2 and 2.1 percent, respectively.

The ECB reiterated its previous position on Thursday that it would closely monitor the data and make decisions based on it, and that interest rates would be kept at their current levels for as long as necessary.

“Based on the current assessment, the Governing Council considers that the key interest rates are at a level which, if maintained for a sufficiently long period, will make a significant contribution to the achievement of this objective (i.e. 2% inflation – editor’s note),” the ECB said, without giving details, on when interest rates could be reduced.

Eurosystem experts predict that economic growth in the common currency bloc will remain “moderate”.

“Nevertheless, the economy is expected to recover thanks to rising real incomes – as people benefit from lower inflation and higher wages – coupled with rising foreign demand,” the report said. about the prospects for the purchasing power of the population.

Thus, the eurozone economy is expected to grow by 0.6 percent this year, by 0.8 percent next year and by 1.5 percent in 2025 and 2026. These forecasts for 2023 and 2024 also have decreased since the fall: in September, it was forecast that eurozone GDP would increase by 0.7% this year and 1% next year. The 2025 results are unchanged.

Interest rates in the Eurozone remain the same:

Base interest rates in the Eurozone have not changed since the ECB Governing Council meeting in September (interest rates were unchanged in October). 1-12 months The long-term interbank interest rate curves “Euribor” have already fallen below 4%. boundaries.

Luminor chief economist Žygymantas Maurics said the day before that, despite the signals sent by the ECB in October, a faster cut in interest rates was possible.

According to him, in the third quarter, the GDP of the euro zone decreased and it is likely that the indicators will also be negative in the fourth quarter. At that time, annual inflation in the euro zone had fallen to 2.4% in November.

“There is a good chance that after the ECB evaluates these indicators, not only will it raise interest rates, as promised, but it will also have more reasons to lower them as early as spring next year. ” The fact that such a scenario is more likely is also demonstrated by the most recent signs from the ECB,” noted Ž. Maurice.

The Euribor falls below 4%. the limit which This year was crossed for the first time since the financial crisis of 2008-2009:

Economist Alexander Izgorodin told The Postedia last week that current Euribor figures reflect market expectations for base interest rates, but that these expectations could be too bold, with a cut likely from next spring or the second half of next year.

“This is probably the story of next spring, at the start of the second half, when the European Central Bank starts to cut interest rates further and it will be really clear whether the slowdown in inflation is sustainable,” commented one expert. economist at Banque Citadele.

SEB bank economist Tadas Poviauskas believes that the Euribor indicators reflect expectations that are too high.

“Within the SEB group, we still maintain the (forecast) that the first reduction will not come until June next year. The market, if we look at the futures contracts, is already waiting for it in March. Maybe the market is ahead of events. April or June would be more logical. March is still too early,” an SEB economist said a week ago.

Annual inflation in Lithuania in November (compared to last November) was equal to the Eurozone average and close to the rate declared by the ECB. middle term 2 percent of target inflation:

The US central bank left its key interest rates unchanged as its chairman, Jerome Powell, said the historic tightening of monetary policy was probably over and the inflation rate was falling faster than expected, reports the Reuters news agency.

CNN notes that this is already the third meeting of the regulator at which interest rates are not changed, and this time a signal was sent about three stages of their reduction in 2024.

The Bank of England left its key interest rate at 5.25 percent on Thursday. and warned that they would remain high “for a long time” in order to curb inflation, ELTA reports.

The Bank of England left rates unchanged at its previous meetings in September and November, ending a streak of 14 consecutive rate hikes. But base rates remain at their highest level in more than 15 years.

Source: The Delfi





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