UOB Group economist Lee Sue Ann analyzes the ECB’s latest interest rate decision.
Main conclusions
The European Central Bank (ECB) decided to keep its three official interest rates unchanged after 10 consecutive increases. The press release accompanying the decision was virtually identical to that of September, with the Governing Council stating that it would continue to rely on the data.
The Governing Council also reiterated its commitment to continue reinvesting the proceeds of maturing bonds acquired through the Emergency Purchase Program (PEPP). At the press conference, ECB President Christine Lagarde said that PEPP parameters and minimum reserve requirements had not been discussed, and did not detail when they might be addressed.
Regarding the latter, the ECB may be waiting for the debate on the review of its framework to resume, which will likely take place in late 2023 or early 2024. Meanwhile, given the rise in bond yields , the ECB will likely continue to hold it until the end of 2024. As for interest rates, we expect the ECB to keep them higher for longer, although the door to future rate hikes remains open.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
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