The European Central Bank (ECB) is expected to keep interest rates unchanged this Thursday, in the first pause in the rate hike cycle that began in July 2022, according to market expectations.
The Board of Governors meets this Thursday in Athens, Greece, to discuss euro area monetary policy.
Several analysts consulted by Lusa consider that, for the first time since July 2022, there should be no changes in official interest rates since, although inflation remains high in the euro zone (4.3% in September), the ECB You may want to wait to see how prices (including energy) and economic growth evolve.
Although the central bank wants to evaluate how the economy is evolving before making new decisions, there are analysts who also consider that rates may have already reached their maximum although cuts are only expected to occur in mid-to-late 2024.
In September, the ECB raised its official interest rates again. The interest rate applicable to the main financing operations increased to 4.50% and the interest rate applicable to the permanent liquidity provision line increased to 4.75%. These rates are the amount that euro area central banks charge commercial banks for lending them money.
The permanent deposit facility will increase to 4.00%, which indicates the value at which the ECB remunerates the money that banks entrust to it.
The ECB’s objective is to have an inflation of 2% in the medium term, so given the increase in inflation it has decided to raise interest rates. When the ECB changes key interest rates, this is reflected throughout the economy, with some of the most visible aspects being the increase in bank lending, including real estate credit.
Former Bank of Portugal governor and former ECB vice-president Vítor Constâncio argued on Wednesday that in the future central banks should rethink the inflation target at around 3%, instead of the current 2%.
Source: TSF
