The European Central Bank left interest rates unchanged yesterday for the first time in more than a year.
It is the bank’s first meeting with no change after 10 straight increases since July 2022 that pushed its key rate to a record high of 4 per cent. The ECB joins the US Federal Reserve, Bank of England and others in holding borrowing costs steady – albeit at the highest levels in years – as inflation has eased.
In Europe, inflation peaked at a painful 10.6 per cent in October for the 20 countries that use the euro currency as Russia’s war in Ukraine took a toll. Those high prices have been poison for consumer spending, draining household finances with added costs for necessities such as food, heat and electricity.
Read more: Bank of Ireland increases fixed mortgage rates for fourth time in a year
But with inflation now down to 4.3 per cent, the ECB held off on more rises during its meeting in Athens yesterday. It was one of the bank’s regular meetings away from its Frankfurt headquarters, meant to underline its status as a European Union institution.
At a news conference, ECB president Christine Lagarde said: “[In Europe] inflation is still expected to stay too high for too long and domestic price pressures remain strong. At the same time, inflation dropped markedly in September.” The bank said it would keep rates high enough to restrict economic activity and contain inflation “for as long as necessary”.
Ms Lagarde noted that the economy was expected to stay weak through to the end of the year, while the wars in Ukraine and the Middle East could create uncertainty about the future and further hurt economic growth in Europe.
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