European Central Bank keeps key interest rate unchanged

Despite stubbornly high inflation, the European Central Bank (ECB) is taking a break from interest rates. The key interest rates remain at 2.5 percent. The ECB announced this after its board meeting today. Economists are now expecting another interest rate hike in December.

It was only last September that the monetary authorities raised interest rates and justified this step with high inflation. The inflation rate in the euro area was recently at 3.8 percent, after 3.2 percent in August. The ECB is aiming for a rate of 2.0 percent.

Lagarde's resignation raises questions

At the subsequent press conference, the focus is likely to be less on the interest rate decision and more on the early resignation of ECB President Christine Lagarde from her position. The ECB confirmed this in the morning. The move is considered unsurprising.

But this also means the race for a successor has broken out. The Dutchman Klaas Knot and the Spaniard Pablo Hernández de Cos are considered future central bank presidents. Bundesbank chief Joachim Nagel is considered largely without a chance, as the chairwoman of the EU Commission, Ursula von der Leyen, is already a German who holds a high European office.

The US Federal Reserve is also keeping quiet

The evening before, the US Federal Reserve had also not touched its key interest rates. The key monetary policy rate remains in the range of 3.75 to 4.00 percent, as the monetary authorities led by Fed Chairman Kevin Warsh announced on Wednesday. However, the decision was not unanimous: the monetary authorities Lisa Cook and Beth Hammack voted in favor of an increase. The central bank admitted that inflation “remains elevated”.

“We assume that the data until the next meeting will support the impression that inflation is too high and is not slowing down,” said Commerzbank economist Bernd Weidensteiner. An interest rate increase of a quarter of a percentage point is therefore expected in December. The central bank raised the key monetary policy rate in September for the first time in around three years to keep stubborn inflation in check.