- Prior decision
- Main refinancing rate 4.50% vs 4.50% expected
- Prior 4.50%
- Deposit facility rate 4.00% vs 4.00% expected
- Prior 4.00%
- Marginal lending facility 4.75%
- Prior 4.75%
- Inflation has dropped in recent months but likely to pick up against temporarily in the near-term
- Past rate hikes are continuing to be transmitted forcefully to the economy
- Tighter financing conditions are dampening demand, and this is helping to push down inflation
- Expects economic growth to remain subdued in the near-term
- Future decisions will ensure that rates will be set at sufficiently restrictive levels for as long as necessary
- To continue a data-dependent approach in determining the appropriate level and duration of restriction
- Rate decisions will be based on assessment of the inflation outlook in light of incoming economic, financial data
- ECB intends to discontinue reinvestments under the PEPP at the end of 2024
- 2023 inflation seen at 5.4% (previously 5.6%)
- 2024 inflation seen at 2.7% (previously 3.2%)
- 2025 inflation seen at 2.1% (previously 2.1%)
- 2026 inflation seen at 1.9%
- Full statement
In terms of the rates outlook and guidance, nothing has changed as the ECB continues to preach a more data-dependent approach. They do acknowledge that inflation pressures have eased slightly as of late but are not declaring victory just yet. That fits with expectations coming into the meeting statement today.
The only notable announcement is that the central bank is going to discontinue PEPP reinvestments by the end of next year, with the intention to reduce the PEPP portfolio by €7.5 billion per month on average in 2H 2024. For now, the PEPP reinvestments will continue accordingly through 1H 2024.
Besides that, the ECB did convey some lower inflation forecasts but are still sticking with a forecast of 2.1% for 2025.