Key Takeaways from ECBs Monetary Policy Decision

 ECB kept the key interest rate unchanged in today's policy decision. 

Marginal Deposit 4.00%

Main Refinancing Operations 4.50%

Marginal Lending 4.75%

The APP portfolio is declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

It intends to continue to reinvest, in full, the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP) during the first half of 2024. Over the second half of the year, it intends to reduce the PEPP portfolio by €7.5 billion per month on average. The Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.

Key Takeaways from Monetary Policy Decision

1. Tighter Financial Conditions dampening demand.
2. Eurosystem staff expect economic growth to remain subdued in the near term. Beyond that, the economy is expected to recover because of rising real incomes – as people benefit from falling inflation and growing wages – and improving foreign demand
3. Key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to achieving target inflation. The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary.
4. Data dependent approach