ECB Leaves Rates Unchanged as Lagarde Announces Early Departure
The European Central Bank left interest rates unchanged, with the deposit rate at 2.50%, while President Christine Lagarde announced her early departure.
The European Central Bank (ECB) decided to keep interest rates unchanged, meeting market expectations following previous hikes. Deposit facility rate remained at 2.50%, the main refinancing operations rate at 2.65%, and the marginal lending facility rate at 2.90%. ECB President Christine Lagarde announced an early departure effective February 7.
Inflation Risks and Monetary Path
The central bank warned that rising energy prices increase inflation risks and threaten economic growth. However, tightening financing conditions in Europe may help moderate inflation. The ECB emphasized it does not commit to a predetermined rate path, leaving the possibility of another rate hike in December on the table.
Market Response and Analyst Outlook
Following the announcement, the euro weakened by about 0.3% against the dollar to around $1.11, while the STOXX 600 index rose by approximately 0.95%. Dean Turner, euro zone and UK chief economist at UBS Global Wealth Management, noted that the decision represents a hawkish pause rather than the end of the tightening cycle, expecting another 25-basis-point hike in December.
