- Prior decision
- Deposit facility rate 3.50% vs 3.50% expected
- Prior 3.75%
- Main refinancing rate 3.65% vs 3.65% expected
- Prior 4.25%
- Marginal lending facility 3.90%
- Prior 4.50%
- It is now appropriate to take another step in moderating the degree of monetary policy restriction
- Recent inflation data have come in broadly as expected
- Inflation is expected to rise again in the latter part of this year due to base effects
- Core inflation projections for 2024 and 2025 have been revised up slightly
- Core inflation seen at 2.9% in 2024, 2.3% in 2025, and 2.0% in 2026
- Economic projections revised slightly downwards
- Economy to grow by 0.8% in 2024, 1.3% in 2025, and 1.5% in 2026
- To continue to follow a data-dependent and meeting-by-meeting approach
- Full statement
The much bigger 60 bps reduction in the refinancing rate is more of a long-flagged technical adjustment. The ECB has been touting plans to narrow the corridor between that and the deposit rate to around 15 bps, so they are doing just that. This is mostly so they can better manage market rates as a whole.
As for the statement, there are no surprises as the ECB flags that inflation is still a risk factor going into Q4 this year.
That just fits with their present thinking that they could go with cutting once every quarter for the time being. EUR/USD remains little changed at 1.1020 currently, not much moved from the decision.