December 12, 2024 at 01:15PM
Prior decision
Deposit facility rate 3.00% vs 3.00% expected
Prior 3.25%
Main refinancing rate 3.15% vs 3.15% expected
Prior 3.40%
Marginal lending facility %
Prior 3.65%
Disinflation process is well on track
Most measures of underlying inflation suggest that it will settle at around 2% target on a sustained basis
Domestic inflation has edged down but remains high, mostly due to wages and prices in certain sectors
Will discontinue reinvestments under PEPP at the end of 2024
To follow a data-dependent and meeting-by-meeting approach to determining appropriate policy stance
ECB is is not pre-committing to a particular rate path
Decisions will be based on assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission
Full statement
The decision is as per expected, so it isn’t really a surprise. However, the more dovish component is the lower projections on the economy as the ECB now sees the euro area economy growing by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026, and 1.3% in 2027. That compares to the September projections of 0.8% in 2024, 1.3% in 2025, and 1.5% in 2026.
This article was written by Justin Low at www.forexlive.com.