March 7, 2024
On March 7, 2024, the Governing Council made the decision to keep the three key interest rates set by the European Central Bank (ECB) unchanged. Therefore, the interest rate on the main refinancing operations, the marginal lending facility, and the deposit facility will all remain at 4.50%, 4.75%, and 4.00%, respectively.
Since the January Governing Council meeting, inflation has further declined, primarily due to a decrease in energy prices, leading to revised projections averaging 2.3% in 2024, 2.0% in 2025, and 1.9% in 2026. Inflation excluding energy and food has also been revised downwards to average 2.6%, 2.1%, and 2.0% respectively. Despite easing underlying inflation measures, domestic price pressures remain high, partly fuelled by robust wage growth. Tight financing conditions and previous interest rate hikes continue to dampen demand, contributing to subdued economic activity with a growth projection of 0.6% for 2024. However, a rebound is anticipated thereafter, with growth expected to reach 1.5% in 2025 and 1.6% in 2026, driven initially by consumption and later by increased investment.
The Governing Council is committed to achieving the 2% inflation target promptly. It believes that the current key ECB interest rates, if maintained for an extended period, will significantly contribute to reaching this goal. Future decisions by the Governing Council will prioritize setting policy rates at appropriately restrictive levels for as long as needed to support the return of inflation to the target.
The Governing Council will maintain a data-dependent approach in deciding the suitable level and duration of restrictive measures. Interest rate decisions will be guided by an assessment of the inflation outlook, considering incoming economic and financial data, underlying inflation dynamics, and the effectiveness of monetary policy transmission.
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