The European Central Bank decided to hold interest rates steady as expected, after implementing the first cut since 2019 at a meeting last month.
According to the bank’s decisions today, Thursday, July 18, the interest rate on deposits recorded levels of 3.75%, while the interest rate on basic refinancing operations decreased to 4.25%.
The last time the European Central Bank raised interest rates was in the September meeting when it reached 4%, the highest level ever.
According to the Monetary Policy Statement: Monetary policy maintains tight financing conditions, while domestic price pressures remain elevated, services inflation remains elevated, and core inflation is expected to remain above target through next year.
Eurozone inflation was 2.5% in June, down from 2.6% in May, but core inflation, which excludes the impact of energy and food, was higher than expected at 2.9%.
Analysts expect the ECB to await more data on wages, economic growth and output before taking further action on interest rate cuts.
At the same time, the monetary policy statement confirmed that it will continue to monitor those areas and there will be no pre-commitment to a specific interest rate range.
However, market expectations still point to two additional rate cuts this year of 25 basis points, the first in September and the second in December.
