26.2 C
New York
HomeTop Global NewsEuropean Central Bank holds interest rates steady after 10 consecutive hikes

European Central Bank holds interest rates steady after 10 consecutive hikes

The European Central Bank headquarters.

Daniel Roland | Afp | Getty Images

The European Central Bank ended its run of interest rate hikes on Thursday, despite new upside risks to inflation from oil markets amid the Israel-Hamas war.

The key rate is set to remain at a record high of 4%, where it was brought through 10 consecutive hikes that began in July 2022 and brought rates back into positive territory for the first time since 2011.

The Governing Council said recent information confirmed its medium-term outlook for inflation to reach 2.1%.

“Inflation is still expected to stay too high for too long, and domestic price pressures remain strong. At the same time, inflation dropped markedly in September, including due to strong base effects, and most measures of underlying inflation have continued to ease,” it said in a statement.

Markets had priced in a more than 98% chance of a hold, after the ECB gave a strong indication at its previous meeting that rates had peaked.

The euro was 0.15% lower against the British pound at 1:40 p.m. London time, declining slightly after the announcement. The European currency was 0.2% down against the U.S. dollar.

The move in September was described as a dovish rise, as the ECB said rates had reached levels that would substantially contribute to the fight against inflation, if “maintained for a sufficiently long duration.”

It repeated this message on Thursday, and said its decision making remains data-dependent.

The ECB’s decision is in line with major central banks around the world, which are widely considered to have already reached or to be on the brink of peak interest rates. The Bank of England, Swiss National Bank and U.S. Federal Reserve all opted to hold in September.

Oil price shock could push ECB into another hike, National Bank of Belgium governor said

Higher for longer

Source link

latest articles

explore more


Please enter your comment!
Please enter your name here