ECB Holds Rates Steady, Eyes Further Disinflation Progress Before Considering Cuts
-
Euro area economy likely stagnated in Q4 2023, but some forward-looking indicators point to a pickup ahead. Inflation declined faster than expected in December, but risks remain balanced.
-
Governing Council agrees it's premature to discuss rate cuts at present meeting; wants to see further progress in disinflation process first.
-
Policy rates to be kept unchanged, as maintained levels expected to ensure timely return of inflation to 2% target if held for sufficiently long duration.
-
Future decisions remain data-dependent; rates to stay at restrictive levels for as long as necessary to bring inflation back towards target.
-
Continued flexibility in reinvesting PEPP portfolio redemptions to counter pandemic-related fragmentation risks.