The European Central Bank (ECB) left three key interest rates unchanged.
This decision was made following the results of the meeting of the regulator's Board of Governors, which was held on Thursday, January 25.
Thus, the base interest rate was kept at 4.5% per annum, the rate on deposits - 4%, and on short-term ECB loans - 4.75%.
The Governing Council decided to keep the three key ECB interest rates unchanged. The trend of weakening core inflation continues and the earlier policy tightening continues to have an active impact on financial conditions. The ECB Governing Council is determined to see inflation return to the 2% target. The Council believes that key rates are at a level that, if maintained over a sufficiently long period, will make a significant contribution to this objective. Future ECB decisions will ensure that key rates remain as long as necessary at levels that constrain economic activity," the ECB said.
The ECB cited the continuing downward trend in core inflation as an argument for keeping rates on hold. The regulator noted that the latest statistical data confirmed its previous assessment of medium-term inflation risks.
Meanwhile, according to Eurostat, annual inflation in the eurozone accelerated from 2.4% in November to 2.9% in December, breaking the downward trend of the past six months. That has raised questions about the timing of the ECB's interest rate cuts. According to a Reuters poll, a majority of economists (59 out of 85) expect the ECB to cut rates in the second quarter of 2024.
More than 70% of participants in the latest poll expect rates to be cut before July, up from about 57% in December. In November, 55% of respondents did not expect policy easing until the second half of the year. According to the latest survey, 38 out of 85 economists believe the first ECB rate cut will happen in June, 21 expect it in April, and 23 predict it will happen in the third quarter or later.