The European Central Bank (ECB) is expected to leave rates unchanged next Thursday, during the first pause in the rate hike cycle that started in July 2022, according to market expectations.
The Governing Council meets today in Athens, Greece, to debate the monetary policy of the eurozone.
Several analysts consulted by Lusa believe that there should be no changes in key interest rates for the first time since July 2022, as even if inflation in the eurozone remains high (4.3% in September), the ECB may want to wait on the numbers. how prices (including energy) and economic growth evolve.
While the central bank wants to assess how the economy is developing before making new decisions, there are analysts who also believe that interest rates may have already peaked, even though the cuts are not expected to take place until mid to late 2024.
In September the ECB further raised its policy interest rate. The interest rate applicable to the main refinancing operations has been increased to 4.50% and the interest rate applicable to the standing liquidity provision facility has increased to 4.75%. These rates are the amount that central banks in the eurozone charge commercial banks to lend them money.
The standing deposit facility will be increased to 4.00%, which indicates the value at which the ECB reimburses the money entrusted to it by banks.
The ECB’s target is 2% inflation in the medium term. Therefore, in view of the increase in inflation, it has decided to increase interest rates. When the ECB changes key interest rates, this is reflected across the economy, with some of the most visible aspects being the increase in bank lending, including home loans.
The former governor of the Bank of Portugal and former vice-president of the ECB, Vítor Constâncio, argued on Wednesday that central banks should reconsider the inflation target to around 3% in the future, instead of the current 2%.
Source: DN
