Today, 18 July, the European Central Bank (ECB) decided to leave interest rates unchanged. After the rate cut of 25 basis points in June, market observers had already expected that the ECB Governing Council would not make any further rate cuts for the time being. Florian Heider, Scientific Director of the Leibniz Institute for Financial Research SAFE, comments on the decision:
“Postponing the next rate cut is the right thing to do. Inflation is still too high for further monetary easing. Even though it came slightly closer to the ECB's two percent target in June at 2.5 percent, it is decisive that inflation has been consistently above the target since the beginning of the year, driven primarily by persistently high core inflation. In particular, the high wage costs in the service sector are a determining factor.
The markets will now look to the September economic growth and inflation outlooks for further signals on the ECB's monetary policy stance. A cautious and data-driven approach will be key to ensuring a sustainable economic recovery while maintaining price stability.”
Scientific Contact
Prof. Dr. Florian Heider
Scientific Director
