European Central Bank leaves key interest rate at 3.75%, waits for signs inflation is under control
The European Central Bank left its key interest rate benchmark unchanged Thursday as its rate-setting council and President Christine Lagarde take their time to make sure stubborn inflation is firmly under control before lowering rates again
The European Central Bank left its key interest rate benchmark unchanged Thursday as its rate-setting council and President Christine Lagarde take their time to make sure stubborn inflation is firmly under control before lowering rates again.
The decision leaves the deposit rate at 3.75%, where it has stood after a single quarter-point cut rate at the previous meeting on June 6.
“Domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year," the bank said in a statement accompanying the decision.
That means home buyers and businesses hoping for lower interest rates in Europe are going to have to wait at least until the bank’s September meeting for more affordable credit — and possibly even longer than that.
The ECB's stance for now resembles that that of the U.S. Federal Reserve, which is expected to hold off lowering rates at its next meeting July 30-31, though the Fed appears closer to cutting rates after that than is the ECB.
The ECB, Fed, Bank of England and other central banks around the developed world sharply raised rates to quell an outburst of inflation that followed Russia's invasion of Ukraine and the end of the pandemic.
Higher rates make it more expensive to borrow money, spend and invest, cooling off demand for goods and, historically, the upward trend for consumer prices.
Inflation in the eurozone has fallen from a peak of 11.6% in October 2022 to 2.5% in June, slowly
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