The European Central Bank keeps interest rates unchanged again after a series of increases Economy

At the previous policy meeting, the European Central Bank put an end to an unprecedented series of interest rate steps to control high inflation. After ten increases since July 2022, the bank decided at the end of October to keep interest rates unchanged after inflation fell significantly.

Last month, inflation in the euro zone fell to 2.4 percent, a sharper decline than economists had expected. In October, consumer prices rose 2.9 percent compared to the previous year. However, the ECB expects a temporary recovery “in the short term.” This is why interest rates remain unchanged.

Consequently, the ECB’s key interest rates remain at unprecedented levels. The deposit rate, at which banks can keep their money at the ECB, is 4 percent. The refinancing interest rate – which banks pay when they borrow money from the European Central Bank for a week – is 4.50 per cent. Banks pay 4.75 percent interest on one-day loans.

The question remains whether and when the ECB will cut interest rates. “We do not think it is time to let down our guard yet. We believe there is still work to be done,” said ECB President Christine Lagarde. She also noted that inflation expectations take into account interest rate policy until the end of November. “What we know now, we are on track to meet our 2% target by the end of the forecast.” According to Lagarde, this is why “there was no discussion of interest rate cuts” during the policy meeting.