ECB raises its key interest rates by 25bps as widely expected. The main refinancing rate, marginal lending facility rate, and deposit rates will be 4.00%, 4.25% and 3.50% after the hike.
In the accompanying statement, it’s reiterated that the Governing Council will continued to follow a “data-dependent approach” in future decisions, to bring rates to levels “sufficiently restrictive” to achieve timely return of inflation to 2% target. Rates will also be kept at that level “for as long as necessary”.
In the updated economic projections, core inflation projection is revised up notably in 2023 and 2024, and slightly in 2025. Growth projection was revised down slightly in both 2023 and 2024.
- Inflation is projected to average 5.4% in 2023, 3.0% in 2024 and 2.2% in 2025. (March: 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025).
- Core inflation is projected to reach 5.1% in 2023, before it declines to 3.0% in 2024 and 2.3% in 2025. (March: 4.6% in 2023, 2.5% in 2024 and 2.2% in 2025).
- Growth is projected to be at 0.9% in 2023, 1.5% in 2024 and 1.6% in 2025. (March: 1.0% in 2023, 1.6% in 2024, 1.6% in 2025).
