On Thursday 18 December, the Governing Council of the European Central Bank (ECB) decided for the fourth time in a row to leave its main key rates unchanged. The deposit facility rate, the main refinancing operations, and the marginal lending facility are therefore maintained at 2.00, 2.15 and 2.40 percent respectively.
ECB President Christine Lagarde said on Thursday that the Governing Council had taken a unanimous decision, and made reference to inflation being under control. “There was unanimous agreement around the table about the fact that all options should be on the table”, she told a press conference.
As at the end of October (see EUROPE 13742/4), she reiterated that the governors were not committing to any predefined path, but were sticking, on a meeting-by-meeting basis, to the data at her disposal.
According to the Eurosystem’s new projections, general price inflation in the euro area could average 2.1% in 2025, 1.9% in 2026, 1.8% in 2027 and 2.0% in 2028.
The President of the ECB emphasised the resilience of the economy, which grew slightly in the third quarter and had been driven mainly by stronger consumption and investment. She also noted the strength of the labour market, with the unemployment rate sitting at 6.4% in October. The President indicated that domestic demand should remain the main driver of growth over the next few years. In addition, real incomes should continue to rise, while the savings rate – which currently remained high – should gradually fall, supporting consumption.
However, the current unfavourable conditions for world trade could continue to weigh on growth in the euro area, leading the Governing Council to stress the “urgent need” to boost economic dynamism.
“We welcome the European Commission’s call for governments to prioritise sustainable public finances, strategic investment and growth-enhancing structural reforms. Unlocking the full potential of the single market is crucial”, said Mrs Lagarde. (Original version in French by Bernard Denuit)