ECB raised its three key interest rates by 25bps today, with main refinancing rate, marginal lending rate, and deposit rate becoming 3.75%, 4.00%, and 3.25%, respectively, effective May 10.
In the accompanying statement, ECB explained that incoming information broadly supports the assessment of the medium-term inflation outlook that the Governing Council formed at its previous meeting.” While headline inflation has declined recently, the ECB noted that “underlying price pressures remain strong.”
The central bank acknowledged that the transmission of past rate increases to euro area financing and monetary conditions has been forceful, but added that “the lags and strength of transmission to the real economy remain uncertain.”
ECB emphasized its commitment to ensuring that policy rates are “sufficiently restrictive” to achieve a timely return of inflation to the 2% medium-term target, stating that rates will be kept at these levels “for as long as necessary”.
The Governing Council will continue to follow a data-dependent approach, basing its policy rate decisions on assessments of inflation outlook in light of incoming economic and financial data, underlying inflation dynamics, and strength of monetary policy transmission.
