He European Central Bank(ECB) extended the status quo on its rates This Thursday, December 14, following in the footsteps of other major central banks. However, left in the air an upcoming monetary easing when you register a slowing inflation.
The main interest rate that remunerates deposits, which serves as a reference for credit in the euro zone, remains at its historically high level of 4%which reached in September.
European Central Bank maintained rates: what other central banks are doing
Also closing on Thursday a hectic yearhe Bank of England maintained its rate for the third consecutive time reference unchanged at 5.25%considering that inflationary pressures persisted, and that their rates probably remained high “over a prolonged period.”
Although The drastic cycle of rising interest rates appears to be coming to an end for the main monetary institutionsnow the question arises of when to reduce the pressure.
“The slowdown in core inflation [salvo los precios volátiles de energía y de materias primas] continues” since October, but “the price tensions remain sustainedmainly due to a dynamic growth in unit labor costs,” the institution says in its statement.
He ECB he no longer considers, however, that inflation will “remain too strong for too long a period”given his 2% targetaccording to the formula that has been repeated since September 2022.
He statement of monetary policy decisions does not give any indication about an upcoming rate relaxation.
On Wednesday the Federal Reserve from the United States paved the way with the decision to maintain the status quo for the third time in a row. The institution “discussed a schedule of rate reductions”commented its president Jerome Powell.
On the other hand, despite the notable decline in inflation in the euro zonethe President of the ECB, Christine Lagardewarned on Thursday “don’t let your guard down”and stated that the council of governors “did not discuss lowering rates.”
Lagarde especially mentioned the inflationary risks linked to “wages”the “geopolitical risks” already the “extreme weather events” which can drive up prices.
The ECB wants to keep interest rates high for as long as necessarygiven that fears a new rise in energy prices in a context of geopolitical tensions, especially in the Middle East. He is also concerned about wage increases that could fuel a spike in prices.
The ECB also announced that it plans to accelerate the reduction of the size of the balance sheetstill saturated with debt acquired during the years of low inflation and covid-19.
Other central banks decided Thursday maintain your monetary paths: he Swiss National Bank maintained its main rate at 1.75% and keep watching the inflationwhich fell to 1.4% in November in the country.
He Bank of Norwaynoting that inflation remains too high, raised its rate for the fourteenth time in more than two years to 4.5%.
Source: Ambito
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