At its meeting today, the Governing Council of the ECB again left the interest rate for the main refinancing operations and the interest rates for the marginal lending facility and the deposit facility untouched. Florian Heider, Scientific Director of the Leibniz Institute for Financial Research SAFE, explains:
“In recent weeks, the ECB has actively managed market expectations of lower interest rates, which was reflected in today’s decision. All signs point to an easing of monetary policy, although this is not expected until mid-year at the earliest. What matters most now is the extent to which the ECB can credibly ensure that inflation will be close enough to the two percent target in the long run.
Although headline inflation in the eurozone is downward, core inflation is proving more persistent, and the picture is mixed across sectors. While energy prices push inflation down, the opposite is true for services. The ECB will also keep an eye on wage developments. Meanwhile, in the US, markets are uncertain about when and in what steps the Fed will begin to turn the corner on interest rates.”
Scientific Contact
Prof. Dr. Florian Heider
Scientific Director
