ECB left interest rates unchanged as wildly expected. Interest rates on the marginal lending facility and the deposit facility are held at 4.25%, 4.50% and 3.75% respectively.
In the accompanying statement, ECB noted that incoming information broadly support the Governing Council’s medium-term inflation outlook. Most measures of underlying inflation were “either stable or edged down” in June. Impact of high wage growth has been “buffered by profits”.
Nevertheless, domestic price pressures are “still high” while services inflation is “elevated”. Headline inflation is “likely to remain above the target well into next year”.
ECB also pledge to keep policy rates “sufficiently restrictive for as long as necessary”, and will continue to follow a “date-dependent and meeting-by-meeting” approach, while “not pre-committing” to a particular rate path.
Full ECB statement here.
