The European Central Bank (ECB) on Thursday decided to leave the basic interest rates unchanged for the second time in a row and lowered inflation estimates, DPA and Reuters reported, cited by Agerpres.

The ECB raised interest rates to a record high this year, but surprise inflation data ruled out further monetary tightening, shifting the debate to when interest rate cuts will begin. in

According to the decision taken on Thursday, the interest rate on the main refinancing operations and the interest rates on the marginal lending line and the deposit line will remain unchanged at 4.50%, 4.75% and 4.00%, respectively.

This is the highest level of interest since the introduction of the euro in 1999. Just 14 months ago, the same rate was a record low of minus 0.5%, meaning banks were paying to keep their cash at the ECB.

“Interest rates are at levels that, if sustained for a sufficiently long period, will make a significant contribution to the achievement of the inflation target,” the ECB’s Governing Council said in a press release at the end of Thursday’s meeting.

Inflation in the Eurozone continues to fall

Eurozone annual inflation fell to 2.4% in November from 2.9% in October, marking the third month in a row that eurozone inflation fell more than expected. On Thursday, the ECB forecast that inflation in the euro zone will fall faster than it predicted three months ago, and the economic outlook is less favorable than before.

The Frankfurt-based institution now forecasts inflation at 5.4% in 2023, after forecasting 5.6% in September. The ECB expects inflation to be 2.7% in 2024, following a forecast of 3.2% in September.

The forecast for 2025 was kept at 2.1%, and 2026 is estimated at 1.9%, below the ECB’s medium-term target of 2%. The ECB forecasts the eurozone economy will grow by 0.6% this year, after a forecast of 0.7% in September, and by 0.8% in 2024, compared to a 1% advance previously forecast.

The Bank of England, Britain’s central bank, decided on Thursday to leave its key interest rate unchanged at its highest level since 2008, but, unlike the ECB, said the situation was unlikely to change anytime soon due to persistently high inflation in the UK.

The Federal Reserve System (Fed), the central bank of the United States, announced a day ago that the benchmark interest rates, also at historic highs, remain unchanged for now. But the Fed sent a strong signal about tapering next year, sending a wave of euphoria on Wall Street and fresh gains in capital markets.