The exterior of the European Central Bank before a press conference in Frankfurt, Germany, September 14, 2023. The bank decided on Thursday not to cut interest rates. File photo by Ronald Vitek/EPA-EFE
July 18 (UPI) — The European Central Bank's (ECB) Governing Council decided Thursday to keep interest rates unchanged following a rate cut in June.
The ECB kept its key rate unchanged at 3.75%, saying it wants to hold its policy rate steady for the time being given ongoing inflationary pressures and may consider an opportunity to cut rates later this year.
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“The Governing Council today decided to keep the ECB's three key interest rates unchanged,” the European Central Bank said in a statement. “The information received broadly confirms the Governing Council's previous assessment of the medium-term inflation outlook.”
The central bank said some underlying inflation measures rose in May but most remained stable or fell in June.
“As expected, the inflationary impact of high wage growth is being mitigated by profits,” the bank said. “Monetary policy is restricting financing conditions. At the same time, domestic price pressures remain elevated, with services inflation rising and headline inflation expected to remain above target next year.”
In cutting interest rates in June, the bank cited “significant improvement” in market conditions from September 2023 onwards, along with underlying inflation data.
“The Governing Council is determined to ensure that inflation returns to its 2 percent medium-term objective in a timely manner,” the central bank said. “The Governing Council will keep policy rates well within the purview of the central bank for as long as necessary to achieve this objective.”