ECB leaves key interest rates steady at record 4% for third straight meeting
FRANKFURT, GERMANY : The European Central Bank left its key interest rate untouched at a record-high 4% on Thursday, keeping credit expensive for businesses and consumers as it tries to make sure inflation is firmly under control before cutting borrowing costs — a move expected later this year. The question is, how much later this year. Financial markets are expecting a rate cut as early as April, while ECB President Christine Lagarde has indicated it likely would happen this summer.
Analysts expect her to use a news conference later Thursday to underline that the bank needs to see more proof that painful inflation — which has made everything from groceries to energy more expensive — has been beaten down. Lagarde is faced with financial markets that are anticipating cuts as early as April, and stock prices that have risen and fallen depending on hopes for the boost from lower rates. She has cautioned that the bank will make decisions based on the latest figures about the economy’s health rather than making longer-term promises.
The ECB kept its benchmark rate steady at 4%, also the path taken by Norway’s central bank Thursday. The same day, the central bank in Turkey, which is suffering from out-of-control inflation of nearly 65%, raised its key rate to 45%, expected to be the last increase for some time. Stock investors saw their holdings, such as those in U.S.
retirement accounts, soar in the last weeks of 2023 as the U.S. Federal Reserve and ECB indicated that a rapid series of rate hikes was ending. Fed Chair Jerome Powell said officials discussed prospects for rate cuts at the bank's December meeting, and the U.S.
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