The representatives of the European Central Bank, as expected, took a break today after the June interest rate cut and will wait for the latest macroeconomic data.
"Today the Governing Council decided not to change any of the ECB's three main interest rates. The incoming information broadly confirms the Governing Council's previous assessment of the medium-term inflation outlook. While some indicators of core inflation increased slightly in May due to one-off factors, most indicators were either unchanged or slightly decreased in June. As expected, earnings moderated the inflationary impact of strong wage growth. Financing conditions remain tight due to ongoing monetary policy. On the other hand, domestic price pressure is still high, the level of service prices has risen, and general inflation is likely to exceed the target level for a considerable part of next year as well," the ECB statement reads.
Thus, the base interest rate will continue to be 4.25 percent, deposits held by commercial banks with the Central Bank will continue to be subject to an interest rate of 3.75 percent, and marginal borrowing will be 4.5 percent.
It is emphasized that the Governing Council is determined to ensure that inflation returns in time to the target level of 2 percent in the medium term. It will keep monetary policy interest rates at sufficiently restrictive levels for as long as necessary to achieve this objective. Decisions regarding the appropriate level and duration of restriction will continue to be made by the Governing Council on a case-by-case basis, based on available data. First of all, it will take decisions on interest rates after assessing the inflation outlook, taking into account the economic and financial data received, the evolution of core inflation and the extent of transmission of monetary policy effects. The Governing Council is not pre-committed to any specific direction of interest rate developments.
ECB President's press conference:
