ECB decides on interest rates – no increase expected

2023-12-13 20:34:43

Against the background of reduced inflation, the European Central Bank (ECB) will decide on its further course this Thursday. The central bank will announce the decision at the council meeting in the afternoon (2:15 p.m.). Many economists expect that the euro’s monetary authorities will not raise interest rates further for the second time in a row. The key interest rate at which commercial banks could obtain fresh money from the central bank is currently 4.5 percent.

After an unprecedented series of interest rate increases in the fight against increased inflation, the monetary authorities did not tighten interest rates any further in October. Higher interest rates make loans more expensive, which can slow down demand and counteract high inflation rates. However, more expensive loans are also a burden for the economy because loan-financed investments become more expensive. The ECB is aiming for stable prices for the euro area in the medium term with an inflation rate of 2.0 percent.

Inflation in the euro area continued to weaken significantly in November. According to the statistics office Eurostat, consumer prices were 2.4 percent above the level of the same month last year, after 2.9 percent in October. Last year, the inflation rate was at times in the double digits as a result of Russia’s war of aggression against Ukraine. At the same time, concerns about the economy are growing. In the third quarter, economic output in the euro area shrank by 0.1 percent compared to the previous quarter.

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