The European Central Bank on Thursday hiked three key interest rates by 25 basis points, amid ongoing high inflation pressures. Accordingly, with effect from May 10, 2023, the interest rate on main refinance operations and the interest rate on marginal credit facility and deposit facility will be raised to 3.75%, 4.00% and 3.25%, respectively.
“The outlook for inflation has remained too high for too long,” the ECB said in its statement.
According to the central bank, headline inflation has declined in recent months, but underlying price pressures remain strong. At the same time, past rate hikes are being transmitted coercively to euro area financing and monetary conditions, while the strength and lag of transmission to the real economy are uncertain.
Overall, incoming information broadly supports the assessment of the medium-term inflation outlook that the ECB made at its last meeting.
Future decisions of the ECB will ensure that policy rates are brought down to sufficiently restrictive levels to achieve a timely return of inflation to the 2% medium-term target and remain at those levels for as long as necessary.
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