The European Central Bank kept interest rates unchanged following its latest Governing Council meeting. The US Federal Reserve also kept interest rates unchanged.
The President of the ECB Christine Lagarde said warned that while inflation in the Eurozone has recently eased to around target levels, risks are titled to the downside due to the war in Iran, and energy and commodity prices are weighting on inflation especially food. Food is a recurring inflation theme in Europe especially in Malta.
However, the ECB President also said that the ECB is well equipped to address any potential shock.
Lagarde emphasised that the ECB remains committed to its 2% inflation target, but made clear that future decisions will be taken on a “meeting-by-meeting” and data-driven basis, without committing to a fixed path for interest rates. She also confirmed that the decision to hold rates was unanimous, underlining the level of concern within the Governing Council about the uncertain outlook.
Financial markets are now increasingly pricing in the possibility that the ECB may be forced to tighten policy again later this year, reversing earlier expectations of rate cuts. The central bank is closely monitoring wage developments, energy markets and supply chain disruptions to assess whether inflationary pressures become entrenched.
You can watch the full press conference here. You can view the decision here.
Newsroom
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