Central Banks' Rate Decisions and Balance Sheet Reduction: Live Coverage

The European Central Bank (ECB) has decided to keep its key interest rates unchanged, citing a temporary pick-up in inflation in the near term. The ECB expects inflation to gradually decline over the next year and reach its 2% target in 2025. Despite easing underlying inflation, domestic price pressures remain elevated due to strong growth in unit labor costs. The ECB anticipates subdued economic growth in the near term but expects a recovery driven by falling inflation, growing wages, and improving foreign demand. The Governing Council is committed to ensuring inflation returns to its target and will maintain restrictive interest rates for as long as necessary. The ECB also plans to advance the normalization of its balance sheet and reduce its pandemic emergency purchase program (PEPP) portfolio by €7.5 billion per month on average in the second half of 2024. The PEPP reinvestments will be discontinued at the end of 2024.