European Central Bank (ECB) Monetary Policy Decision summary

Monetary policy and interest rate decisions

• Deposit facility rate lowered by 25 basis points to 3.50%, effective 18 September 2024.

• Main refinancing operations and marginal lending facility rates set at 3.65% and 3.90% respectively.

• Policy rates will remain restrictive as needed to ensure inflation returns to the 2% target.

• No pre-commitment to a specific rate path; decisions will be data-dependent and reviewed meeting by meeting.

• Decision based on updated inflation outlook, underlying inflation dynamics, and policy transmission strength.

Inflation and economic outlook

• Headline inflation projected at 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026.

• Inflation expected to rise later this year due to base effects from energy prices, then decline toward target in 2025.

• Core inflation for 2024 and 2025 revised up slightly due to higher services inflation.

• Core inflation expected to fall from 2.9% in 2024 to 2.3% in 2025 and 2% in 2026.

• Economic growth forecast at 0.8% for 2024, rising to 1.3% in 2025 and 1.5% in 2026.

Economic activity and labor market

• Domestic inflation remains high as wages continue to rise, though labor cost pressures are moderating.

• Profits are partially absorbing higher wage costs, limiting inflation impact.

• Financing conditions remain restrictive, with subdued economic activity due to weak private consumption and investment.