The ECB decides interest rates: it maintains them at 4.5% for another month

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This  the European Central Bank (ECB) announces that it is maintaining interest rates in the eurozone. After 10 increases so far this year, the price of the euro continues at 4.5%. How will this measure affect mortgages? Let's see it!

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What are ECB interest rates?
The official interest rates of the European Central Bank (ECB) are the percentages, set and used by the ECB, that are paid for borrowing, and serve to maintain price stability in the euro zone .

Therefore, they represent an essential element in the Saudi Arabia Phone Number List
orientation of monetary policy, because they have a direct impact on the financing costs of European economic agents, both governments, companies and households.

There are three official interest rates :

Interest rate on main financing operations : they provide liquidity to the banking system on a weekly basis, and indicate the cost that credit institutions must pay to the ECB to obtain financing.
Deposit facility interest rate : determines the interest that credit institutions receive on their overnight deposits at the central bank.
Marginal credit facility interest rate : rate charged by the ECB to credit institutions for lending them money within one day.
Interest rate situation
After the ECB's last meeting of the year held on December 14, 2023, the supervisor has decided to maintain interest rates at 4.5% , as happened in October. Given this measure, markets are already speculating with a decrease in rates for early 2024 , since inflation in the eurozone has reached its lowest level this November in more than two years.

However, the president of the ECB is not so optimistic and warns otherwise: "Although inflation has fallen in recent months, it is likely to temporarily rebound again in the short term." That is why they are committed to maintaining interest rates at sufficiently restrictive levels for as long as necessary.

This year 2023 has been marked by the most intense increase in interest rates so far , as well as the fastest, since the price of the euro has increased 450 basis points in just over a year, thus going from 0% in June 2022 at 4.5%, which has been established since September 2023 . This high figure is only 25 points away from reaching the maximum recorded in history in October 2000.




This maintenance by the ECB of interest rates has one objective: to reduce the inflation rate that the country has been suffering as a result of the Russian invasion of Ukraine, and which has reached figures as high as 10.8%. in July 2022. Currently this Consumer Price Index (CPI) rate is 3.2%.

Recommended reading:   Forecast increase in the rental CPI in 2024
ECB interest rate forecast for 2024
The Governing Council remains behind its objective, ensuring that inflation returns to 2% in the medium term and preserving the proper functioning of the transmission of monetary policy.