ECB set to hold rates as inflation drifts downwards

FE Team | Published: October 23, 2023 23:23:20

BERLIN, Oct 23 (AFP): For the first time in over a year, European Central Bank policymakers are expected to decide against raising interest rates again when they gather in Athens on Thursday.
Once red-hot, inflation, driven by Russia's invasion of Ukraine in early 2022, has started to ease, while the outlook for the economy has worsened.
Consumer prices in the 20-nation currency bloc rose at an annual rate of 4.3 per cent in September, its lowest rate in almost two years.
The figure remains clearly above the ECB's two-per cent target, but the pain of rising interest rates has been increasingly felt across the bloc.
The outbreak of the Israel-Gaza war has added to the potential troubles faced by the eurozone economy, already weathering the impact of the conflict in Ukraine.
The central bank, which holds one meeting outside its Frankfurt headquarters every year, looks set to follow in the footsteps of the US Federal Reserve and pause interest rate hikes for the time being. All indications since the last meeting in September were that the ECB's current tightening cycle was "over", said Jack Allen-Reynolds of Capital Economics.
Currently, the ECB's key deposit rate sits at four per cent, its highest mark in the history of the central bank.
But after deciding to hike at each of its last 10 meetings, raising rates at their fastest pace ever, "the ECB won't be in any rush to take further action", said ING bank analyst Carsten Brzeski.