Comparison of ECB August statement with September statement ForexLive

18 July
2024

The Governing Council took this decision today keep
D The three key ECB interest rates were unchanged. Supports incoming data extensively Governing Council previous
assessment medium term Inflation outlook. Some measures though
of underlying inflation tick

up In May, most measures were either stable or declined in June due to one-off factors. Inflation as expected

effect Higher wage growth has been buffered by gains. Monetary policy keeps financing Conditions are limited. at the same time, domestic
Price pressures remain high, services inflation is elevated and headline inflation is likely to remain above target over the next year.

The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. It will keep policy rates fairly tight for as long as necessary to achieve this goal. The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restrictions. In particular, its interest rate decisions will be based on an assessment of the inflation outlook in light of incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committed to a specific rate path.

Key ECB interest rates

D
Interest rates on principal refinancing operations and Interest rate on Marginal loan facility and Deposit facility This will remain unchanged 4.25%, 4.50% And 3.75% respectively.

Asset Purchase Program (APP) and Pandemic Emergency Purchase Program (PEPP)

The APP portfolio is declining at a measured and predictable pace, as the Eurosystem no longer reinvests principal payments from maturing securities.

The Eurosystem no longer reinvests all principal payments from maturing securities purchased under the PEPP, reducing the PEPP portfolio by an average of €7.5 billion per month. The Governing Council intends to stop reinvestment under PEPP at the end of 2024.

The Governing Council will continue to exercise flexibility in reinvesting incoming redemptions in the PEPP portfolio, with the aim of addressing the risk of monetary policy transmission processes related to the pandemic.

Refinancing operations

As banks repay the amounts borrowed under the targeted long-term refinancing program, the Governing Council will regularly assess how the targeted lending program and their ongoing repayments are contributing to its monetary policy stance.

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Inflation returns to its 2% target over the medium term and the Governing Council is ready to adjust all its instruments within its mandate to preserve the smooth functioning of monetary policy transmission. Furthermore, the transmission protection instrument is available to counter unwanted, chaotic market dynamics that pose a serious threat to the transmission of monetary policy in all euro area countries, thus allowing the Governing Council to deliver its price stability mandate more effectively.