FRANCOFORTE (GERMANY) (ITALPRESS) – The Governing Council of the European Central Bank today decided to maintain unchanged the three reference interest rates. In detail, interest rates on deposits at the central bank, major refinancing operations and marginal refinancing operations will remain at 2.50%, 2.65% and 2.90% respectively.
“Energy prices have continued to increase, leading to risk for inflation prospects and downside risks for growth prospects – emphasises the ECB in a note. Although energy shock is still manifesting all its effects, so far the underlying inflation has remained substantially stable and wages have not reacted significantly at this stage. The greater extent and duration of energy shock and its implications for indirect and second impact effects will likely increase inflation and weaken growth. The financing conditions have been tightened by the last meeting of the Governing Council and it is likely that this will affect inflation and growth. The Governing Council undertakes to define monetary policy in order to ensure that inflation is based on the objective of 2% in the medium term.”.
The Governing Council remains “in a favourable position to address the current situation of high uncertainty – the note continues –. In order to define the appropriate monetary policy orientation, a data-driven approach will follow, according to which decisions are taken from time to time at each meeting. In particular, the decisions of the Governing Council on interest rates will be based on the assessment of the prospects for inflation and the risks associated with them, considered the new economic and financial data, as well as the dynamics of underlying inflation and the intensity of the transmission of monetary policy, without binding on a particular path of rates.”.
The portfolios of the Business Purchasing Programme (PAA) and the PEPP (pandemic emergency program) are reducing at a measured and predictable pace, as the Eurosystem no longer reinvests the capital repaid on the securities expiring.
The Governing Council “is ready to adapt all its instruments within its mandate to ensure that inflation is established on the medium-term objective of 2% and to preserve the smooth functioning of the monetary policy transmission mechanism – concludes the note. Moreover, the instrument of protection of the monetary policy transmission mechanism can be used to counter unjustified, disorderly market dynamics that seriously jeopardize the transmission of monetary policy in all the countries of the euro area, thus enabling the Governing Council to fulfil its mandate of price stability more effectively.”.
– Photo IPA Agency –
(ITALPRESS).
