FRANKFURT (GERMANY) (ITALPRESS) – The Governing Council of the European Central Bank has decided to cut its three key interest rates by 25 basis points: those on deposits with the central bank, the main refinancing operations and the marginal lending facility will be reduced to 3.25 percent, 3.40 percent and 3.65 percent, respectively, effective Oct. 23, 2024. This is the third rate cut in 2024, following those decided in June and September. “In particular, the decision to reduce the rate on deposits with the central bank, the rate through which the Governing Council steers monetary policy, stems from the updated assessment of the inflation outlook, the dynamics of core inflation and the intensity of monetary policy transmission,” the ECB explained in a note. “The latest information on inflation indicates that the disinflationary process is well underway. The inflation outlook is also affected by recent downward surprises in indicators of economic activity. At the same time, financing conditions remain restrictive. “Inflation is expected to rise in the coming months, then decline and reach the target over the next year. Domestic inflation remains high as wages continue to grow at a strong pace. At the same time, pressures on labor costs should continue to ease gradually, in an environment where profits partially mitigate their impact on inflation,” the BoE continues. “The Governing Council is determined to ensure the timely return of inflation to its 2 percent medium-term target. It will maintain key policy rates at sufficiently restrictive levels as long as necessary to achieve this end. To determine the appropriate level and duration of tightening, the Governing Council will continue to follow a data-driven approach whereby decisions are determined on a case-by-case basis at each meeting. In particular, interest rate decisions will be based on its assessment of the outlook for inflation, given new economic and financial data, the dynamics of core inflation, and the intensity of monetary policy transmission, without tying itself to a particular rate path.”
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(ITALPRESS).
