- Prior decision
- Deposit facility rate 2.00% vs 2.00% expected
- Prior 2.25%
- Main refinancing rate 2.15% vs 2.15% expected
- Prior 2.40%
- Marginal lending facility 2.50%
- Prior 2.65%
- Inflation is currently at around the 2% medium-term target
- Most measures of underlying inflation suggest that inflation will settle at around 2% target
- ECB will follow a data-dependent, meeting-by-meeting approach to determine appropriate policy stance
- ECB is not pre-committing to a particular rate path
- Headline inflation is set to average 2.0% in 2025, 1.6% in 2026 and 2.0% in 2027
- Core inflation is set to average 2.4% in 2025 and 1.9% in 2026 and 2027
- Real GDP growth is seen averaging 0.9% in 2025, 1.1% in 2026 and 1.3% in 2027
- Full statement
The decision is as expected and there’s nothing in the statement that really stands out. The ECB reaffirms that it will remain data-dependent and we’ll see what exactly the degree that will be from Lagarde later.
As for the latest staff projections, there’s no notable change to the economic forecast and core inflation for the most part. Headline inflation is revised a little lower but the ECB attributes that to “lower assumptions for energy prices and a stronger euro”.
EUR/USD is broadly unchanged at 1.1423 currently after the decision and statement.
This article was written by Justin Low at www.forexlive.com.
