The European Central Bank (ECB) maintains interest rates for the second consecutive meeting, revising growth forecasts downward and unveiling plans to expedite the reduction of its balance sheet.
Despite acknowledging elevated domestic price pressures, particularly in labour costs, the ECB emphasises a commitment to sufficiently restrictive policy rates.
Inflation expectations are adjusted, with the central bank anticipating a gradual decline in the coming year.
The decision, coupled with the completion of reinvestments under the pandemic emergency purchase program, signals a shift toward tightening monetary policy.
1. ECB holds interest rates steady, citing a need for sufficiently restrictive policy measures.
2. Growth forecasts are revised lower, with average real Gross Domestic Product (GDP) projections adjusted for 2023 and 2024.
3. Inflation expectations are moderated, with the European Central Bank (ECB) anticipating a gradual decline in the year ahead.
4. The central bank emphasises elevated domestic price pressures, particularly driven by labour cost growth.
5. Core inflation, excluding energy and food, is projected at 5% in 2023 and decreases in subsequent years.
6. The ECB sees tighter financing conditions as a factor dampening demand and controlling inflation.
7. Plans to expedite the reduction of the balance sheet are announced, with a focus on normalising operations by the end of 2024.
