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The ECB Council at the meeting in Brdo pri Kranju once again lowered interest rates

by AI | 17.Oct 2024 | Europe in brief AI

The ECB Council, at its meeting in Slovenia this time, lowered the central euro interest rates for the second consecutive time, but ECB President Christine Lagarde announces persistence in continuing restrictive monetary policy.

President of the ECB Christine Lagarde at the press conference after the ECB council meeting in Brdo pri Kranju. Photo: Bor Slana/STA

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Brdo pri Kranju – The European Central Bank (ECB) Council met this time at Brdo pri Kranju and, as expected, lowered the main euro interest rates for the second time in a row. The 0.25 percentage point reduction is also the third cut in interest rates since the monetary policy shift in June.

The deposit facility rate, which is the rate at which banks place funds at the euro area central banks and which is newly the benchmark for euro monetary policy, will now be at 3.25 percent. The rates for main refinancing operations and the marginal lending facility will be at 3.40 and 3.65 percent, respectively. The new rates will take effect on October 23.

The decision to lower interest rates again, according to the ECB Council, is based on an updated assessment of inflation prospects and the intensity of monetary policy operations in the economy and the financial system. Today, the European statistical office Eurostat announced that euro area inflation was at 1.7 percent on an annual basis in September, which is 0.1 percentage points less than the initial estimate. This marks the first time since June 2021 that inflation has slipped below two percent, the ECB’s medium-term target.

ECB President Christine Lagarde stated at a press conference following the council meeting that today’s ECB Council meeting at Brdo pri Kranju was a demonstration of this data-driven approach to real-time monetary policy adjustments.

“Have we broken the back of inflation? No. Are we on the path to doing so? Yes,” stated the Frenchwoman, recalling the still excessively high food prices to which the population is most sensitive. She reiterated that the council is aware that inflation will slightly spike in the coming months. She also insisted that ECB’s monetary policy remains undoubtedly restrictive, even after today’s reduction. (October 17)

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