Summary
- Decided to raise the three key ECB interest rates by 50 basis points; accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.00%, 3.25 % and 2.50% respectively, with effect from 8 February 2023. (change)
- The Governing Council will stay the course in raising interest rates significantly at a steady pace and in keeping them at levels that are sufficiently restrictive to ensure a timely return of inflation to its 2% medium-term target. (No Change)
- In view of the underlying inflation pressures, the Governing Council intends to raise interest rates by another 50 basis points at its next monetary policy meeting in March and it will then evaluate the subsequent path of its monetary policy. (New)
- Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and guard against the risk of a persistent upward shift in inflation expectations. (No Change)
- The Governing Council’s future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach. (No Change)
- The Governing Council today also decided on the modalities for reducing the Eurosystem’s holdings of securities under the asset purchase programme (APP) and the APP portfolio will decline by €15 billion per month on average from the beginning of March until the end of June. The subsequent pace of portfolio reduction will be determined over time. (Change)
- The remaining reinvestment amounts will be allocated proportionally to the share of redemptions across each constituent programme of the APP and, under the public sector purchase programme (PSPP), to the share of redemptions of each jurisdiction and across national and supranational issuers. For the Eurosystem’s corporate bond purchases, the remaining reinvestments will be tilted more strongly towards issuers with a better climate performance. (Change)
- The Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance. (No Change)
- The Governing Council will continue applying flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to countering risks to the monetary policy transmission mechanism related to the pandemic. (No Change)
- As banks are repaying the amounts borrowed under the targeted longer-term refinancing operations, the Governing Council will regularly assess how targeted lending operations are contributing to its monetary policy stance. (No Change)
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