European Central Bank leaves interest rates unchanged
The Governing Council of the European Central Bank (ECB) has, as expected, decided to keep interest rates unchanged, after lowering them for the first time since 2019 in June. According to the ECB, the deposit rate for bank deposits at the ECB remains at 3.75%. Regarding further interest rates, the statement reads: "The Governing Council is resolved to ensure that inflation returns to its medium-term objective of 2% in a timely manner. It will hold interest rates at a sufficient restrictive level as long as necessary to achieve this objective."
The Governing Council will continue to follow a data-dependent approach and make decisions at each meeting to determine the appropriate height and duration of monetary restriction. "In particular, its interest rate decisions will depend on its assessment of inflation expectations in the light of incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary transmission," the statement says. The Governing Council does not prejudge a specific interest rate path.
The discussion on monetary policy in the European Union often involves elements of Politics, as decisions on interest rates, such as the current unchanged rate set by the ECB, can have significant economic implications. Furthermore, Financial Regulation plays a crucial role in shaping the EZB's ability to adopt and implement such decisions on interest rates, including those made by the Governing Council.
