ECB Holds Deposit Rate at 2.25%, Watches Spillover From Rising Oil Prices
Summary
- The European Central Bank said it had decided to hold its deposit rate at 2.25%, its main refinancing rate at 2.40%, and its marginal lending facility at 2.65%.
- The decision kept the gap between the ECB’s deposit rate and the US benchmark rate of 3.50% to 3.75%, as well as the spread with South Korea’s benchmark rate of 2.75%, unchanged.
- The ECB said it is monitoring the spillover effects and second-round effects of the rise in energy prices, including global oil prices.
Forecast Trend Report by Period
The European Central Bank left its three key interest rates unchanged.
After a monetary policy meeting in Frankfurt on July 23, the ECB said it would hold the deposit rate at 2.25%. It also kept the main refinancing rate at 2.40% and the marginal lending facility rate at 2.65%.
The decision leaves the gap between the ECB’s deposit rate, its main policy benchmark, and the US benchmark rate of 3.50% to 3.75% at 1.25 to 1.50 percentage points. The spread with South Korea’s benchmark rate of 2.75% remains 0.50 percentage point.
At its previous monetary policy meeting in June, the ECB raised all three policy rates by 0.25 percentage point each. It was the central bank’s first rate increase since September 2023, after a pause of two years and nine months.
The ECB said it is watching the spillover effects of rising energy prices, including global oil prices. “The outlook for energy prices is similar to the June baseline scenario and remains well above levels seen before the Middle East conflict,” the central bank said on July 23. It added that it is monitoring the intensity and duration of the shock, as well as second-round effects.
JOON HYOUNG LEE
gilson@bloomingbit.ioCrypto Journalist based in Seoul