$EUINTR - Highest Level since 2000

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The European Central Bank raised Interest Rates by a Quarter of a percentage point Thursday, judging that Inflation remains too High ;

even as data points to a deepening economic downturn in the 20 countries that use the euro.⁠
⁠The move takes the benchmark rate in the euro area to 3.75%, the highest since October 2000.

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The ECB hiked interest rates for the 10th consecutive time on September 14th and signaled that it is likely done tightening policy, as inflation has started to decline but is still expected to remain too high for too long. Consequently, the main refinancing operations rate reached a 22-year high of 4.5%, and the deposit facility rate set a new record at 4%. According to the September ECB staff macroeconomic projections for the Euro Area, average inflation is forecasted to be at 5.6% in 2023 and 3.2% in 2024, both higher than previous estimates, primarily due to an elevated path for energy prices. In contrast, the 2025 rate projection has been cut to 2.1%.

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(4.5% October/2023)

source: European Central Bank

-The European Central Bank kept interest rates at multi-year highs during its October meeting,
marking a significant shift from its 15-month streak of rate hikes and reflecting a more cautious "wait-and-see" stance among policymakers, influenced by the gradual easing of price pressures and concerns about an impending recession.
This decision follows a series of ten consecutive rate increases since July 2022,
which elevated the main refinancing operations rate to a 22-year high of 4.5% and the deposit facility rate to an all-time record of 4%.
The central bank stated its determination to ensure that inflation returns to its 2% target over the medium term, saying it will maintain interest rates at these high levels for a sufficiently extended period until it achieves that objective.

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ECB & BoE Push Back Against Rate Cuts Expectations

The ECB and BoE left interest rates ( & ) at multi-year highs while committing to sustain these restrictive levels for as long as needed.
This stands in contrast to the US Federal Reserve,
which unexpectedly signaled yesterday its intention to implement three 25bps rate cuts in 2024 for

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The European Central Bank kept interest rates unchanged at record-high levels during its first meeting of 2024 and pledged to maintain them at sufficiently restrictive levels for as long as necessary to bring inflation back to its 2% target in a timely manner, despite concerns about a looming recession and a gradual easing in inflationary pressures.
The main refinancing operations rate remained at a 22-year high of 4.5% for a third consecutive time, while the deposit facility rate held steady at an all-time record of 4%.
During the central bank's press conference, President Lagarde told reporters that officials unanimously concurred that it was premature to engage in discussions regarding interest rate cuts.
The ECB concluded its rapid rate-hiking cycle in September, but it has sustained a somewhat hawkish stance due to persistent underlying price pressures within the Eurozone and uncertainties stemming from geopolitical tensions, including the Red Sea blockade.

source: European Central Bank

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ECB Holds Rates, Cuts Growth & Inflation Projections

The ECB kept interest rates at record-high levels during the March 2024 meeting, in line with market expectations, and reinforced that borrowing costs will remain elevated for as long as necessary.
At the same time, the central bank acknowledged inflation is falling faster than anticipated and revised inflation and growth forecasts lower for this year.

source: European Central Bank

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The European Central Bank maintained interest rates at record-high levels for a fifth consecutive time during its April meeting, with the main refinancing operations rate remaining unchanged at a 22-year high of 4.5% and the deposit facility rate holding at an all-time record of 4%.
The bloc's central bank also said it may consider reducing the level of policy restriction, if it becomes more confident that inflation is moving steadily toward the 2% target.
Officials also acknowledged that inflation has continued to decline, with most measures of underlying inflation and wage growth easing.
However, they cautioned that domestic price pressures remain strong, leading to high services price inflation.
During the central bank's press conference, President Lagarde told reporters that the ECB is not pre-committing to a particular rate path, and future moves will be data-dependent.

source: European Central Bank

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4.25% (June/2024)
source: European Central Bank

The ECB lowered the three key interest rates by 25 basis points in June, in line with expectations, marking a shift from nine months of stable rates after inflation declined by more than 2.5 percentage points since September 2023. The main refinancing operations rate was lowered to 4.25%, the deposit facility rate to 3.75%, and the marginal lending rate to 4.5%.
However, domestic price pressures remain elevated, indicating continued inflationary challenges. To address this, the Council aims to keep policy rates sufficiently restrictive, maintaining a data-dependent approach.
The latest Eurosystem staff projections for both headline and core inflation have been revised up for 2024 and 2025.
Staff now see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026.
For inflation excluding energy and food, staff project an average of 2.8% in 2024, 2.2% in 2025 and 2.0% in 2026.
Economic growth is expected to pick up to 0.9% in 2024, 1.4% in 2025 and 1.6% in 2026.

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(July/2024) 4.25%
source: European Central Bank

The ECB decided to keep interest rates unchanged in July 2024, as expected, as current data supports their previous inflation outlook. The main refinancing operations rate remained at 4.25%, the deposit facility rate at 3.75%, and the marginal lending rate at 4.5%. Some inflation indicators rose in May due to temporary factors, but most stabilized or fell in June. High wage growth's inflationary impact has been mitigated by profits, and monetary policy remains restrictive. Despite this, domestic price pressures and services inflation are still high, with overall inflation expected to stay above target into next year. The Council aims to return inflation to 2% and will maintain restrictive policy rates as needed. Decisions on rates will depend on ongoing economic data, underlying inflation trends, and the effectiveness of monetary policy. The Council is flexible and will adjust rates based on evolving data, without committing to a fixed path.