ECB leave interest rates on hold at 4.00%
6 March 2008
For the ninth consecutive meeting, the European Central Bank voted to keep interest rates on hold at 4.0% this afternoon.
With Consumer Price Inflation running at an all time high of 3.2%y/y, the ECB can ill afford to deviate from its recently determined hawkish stance. However, policymakers have been forced to recognise the deteriorating growth outlook resulting from market volatility, seized up money markets and strong signals that the US economy may be in the midst of recession. Unlike the US Federal Reserve, the ECB’s primary role is to regulate Eurozone price stability, leaving them unable to cut rates to stimulate growth.
The focus now shifts to the accompanying news conference at 1.30pm where the market will be looking to gauge the rationale behind today’s decision and for any insight to the committee’s thinking going forward.