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- The European Central Bank (ECB) is leaving interest rates in the euro area unchanged for the time being.
- According to a decision by the ECB Council, the key interest rate remains at 4.5 percent, as the central bank in Frankfurt announced.
- The US Federal Reserve and the Swiss National Bank had previously stated that they would keep the key interest rate constant.
Inflation in the euro area weakened significantly in November. According to the statistics office Eurostat, consumer prices were 2.4 percent above the level of the same month last year, after 2.9 percent in October.
Last year, the inflation rate was at times in the double digits as a result of Russia’s war of aggression against Ukraine. In the medium term, the ECB is aiming for stable prices with an inflation rate of 2.0 percent for the common currency area with its 20 member states.
After an unprecedented series of ten interest rate increases in a row in the fight against high inflation, the monetary authorities stopped tightening interest rates for the first time in October. Higher interest rates make loans more expensive, which can slow down demand and counteract high inflation rates. More expensive loans are also a burden for the economy because loan-financed investments become more expensive.
Deposit interest rate remains at 4.0 percent
The economy in the euro area is weakening. According to Eurostat, economic output shrank by 0.1 percent in the third quarter compared to the previous quarter. In the second quarter, gross domestic product (GDP) grew by 0.2 percent after stagnation at the beginning of the year.
The deposit interest rate that banks receive for parked funds remains at 4.0 percent following the ECB Council’s recent decision. This is the highest level since the monetary union was founded in 1999.
SRF 4 News, December 14, 2023, 2:30 p.m.; agencies/flal/hesa;bers
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