September 14, 2023 (MLN): European Central Bank (ECB) on Thursday increased the benchmark refinancing interest rate by 25 basis points to 4.5%.
This hike came largely in line with the market’s expectations, wherein the market participants were expecting a 25bps hike.
The Governing Council decided to raise all three key ECB interest rates by 25 basis points.
Accordingly, the interest rates on the marginal lending facility and the deposit facility will also be increased to 4.75% and 4% respectively, with effect from September 20, 2023, along with the main benchmark refinancing rate.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 17:45 PST today (in 10 mins).
The rate increase today reflects the Governing Council’s 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.
The September ECB staff macroeconomic projections for the euro area see average inflation at 5.6% in 2023, 3.2% in 2024, and 2.1% in 2025.
Underlying price pressures remain high, even though most indicators have started to ease.
