Monetary Policy

The latest macroeconomic projections point to a continuation of moderate economic growth in the euro area over the entire projection horizon, while inflation will stabilise around its target rate of 2%. Amid increased uncertainty and rising energy prices, the projections for this year are forecasting slightly slower economic growth and slightly higher inflation than forecast in the previous projections.

Under these circumstances the Governing Council of the ECB yesterday opted once again to reduce key interest rates by 25 basis points. This brings the cumulative cut since June of last year, when the Governing Council made its first rate cut, to 1.5 percentage points. The risks surrounding future developments remain high, and so incoming data and the situation as it stands at the time will continue to be the key factors when monetary policy decisions are taken.