[2nd report] ECB interest rate freeze… Deposit interest rate: 2.50% per year

The European Central Bank (ECB) froze its three major policy interest rates on the 29th (local time).

The ECB held a monetary policy meeting in Frankfurt, Germany on this day and announced that it decided to freeze the deposit interest rate at 2.50% per annum, and the base interest rate (main refinancing rate) and marginal lending rate at 2.65% and 2.90%, respectively.

The gap between the deposit interest rate, which is the standard for ECB monetary policy, and the Korean base interest rate (3.00%) was maintained at 0.50% point, and the gap with the United States (3.75-4.00%), which froze the base interest rate the previous day, was maintained at 1.25-1.50% point.

“The full impact of the energy shock continues to be revealed,” the ECB said in a statement. “Underlying inflation has remained broadly stable so far and wages are also showing no apparent response at this stage.”

However, he did not completely rule out the possibility of additional interest rate hikes, saying, "Considering the scale and duration of the energy shock increases and the impact of indirect and secondary ripple effects, prices are likely to rise and growth to slow."

After prices began to fluctuate with the outbreak of the Iran war in late February, the ECB raised the policy interest rate by 0.25% points twice in June and last month.

As energy prices soared due to the war, the consumer price inflation rate in the Eurozone (21 countries that use the euro) last month recorded 3.8% compared to the previous year. It is the highest level in three years since September 2023 and is close to double the ECB target of 2%.

The dominant analysis is that the ECB's future interest rate path depends on energy price trends and secondary ripple effects. Experts believe that the ECB will raise interest rates further as early as December.