ECB Freezes Interest Rates... Deposit Rate at 2.50%

The European Central Bank (ECB) froze its three key policy rates on the 29th, local time.

The ECB announced that it held a monetary policy meeting in Frankfurt, Germany, on this day and decided to keep the deposit facility rate at 2.50 percent, the main refinancing rate at 2.65 percent, and the marginal lending facility rate at 2.90 percent.

The gap between the ECB's deposit rate, which serves as its monetary policy benchmark, and South Korea's base rate was maintained at 0.50 percentage points, while the gap with the United States—which froze its benchmark interest rate the previous day—remained at 1.25 to 1.50 percentage points.

In a statement, the ECB said, "The full impact of the energy shock continues to play out," adding, "Underlying inflation has remained largely stable so far, and wages have not shown a clear reaction at this stage."

However, the ECB noted, "Considering the scale and duration of the energy shock and the impact of indirect and second-round effects, prices could rise and growth could slow," leaving open the possibility of additional rate hikes.

After inflation began to fluctuate following the outbreak of the Iran war at the end of February, the ECB raised its policy rates by 0.25 percentage points twice, in June and last month.

Due to surging energy prices driven by the war, the eurozone's consumer price inflation rate last month stood at 3.8 percent compared to the previous year.

This is the highest level in three years since September 2023 and nearly double the ECB's target of 2 percent.

Prevailing analysis suggests that the ECB's future rate path depends on trends in energy prices and the presence of second-round effects.

Experts expect the ECB to implement additional rate hikes as early as this coming December.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.