ECB kept interest rates steady despite high inflation

The ECB Governing Council announced the interest rate decision after its October meeting in Frankfurt.

Accordingly, following the US Federal Reserve (Fed), the ECB also paused the interest rate hike cycle for now.

In line with market expectations, the bank kept the deposit rate constant at 2.50 percent, the main refinancing rate at 2.65 percent and the marginal funding rate at 2.90 percent.

Market analysts expected the Bank to keep its three main policy rates constant despite the energy crisis and rising price pressures triggered by tensions in the Middle East. However, analysts predict that interest rates may be increased again in both the USA and the Eurozone before Christmas.

Enerji şoku büyüme ve enflasyonu tehdit ediyor

In the statement published after the meeting, it was emphasized that rising energy prices pose upward risks to the inflation outlook and downward risks to the growth outlook.

In the statement, it was noted that the indirect effects of the energy shock could escalate inflation, and that financing conditions continued to tighten.

The statement reiterated that the ECB will not make a prior commitment regarding the future course of monetary policy and added: "The Governing Council will continue its data-driven and meeting-based approach to ensure that inflation returns to the 2 percent target in the medium term. Decisions will be shaped according to economic and financial data and the strength of monetary policy pass-through."

In the ECB's statement, it was also reported that the Asset Purchase Program (APP) and Pandemic Emergency Asset Purchase Program (PEPP) portfolios continued to be reduced at a measured and predictable pace.

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