The Economics and Statistics Division maintains archives of previous publications for accountability purposes, but makes no updates to keep these documents current with the latest data revisions from Statistics Canada. As a result, information in older documents may not be accurate. Please exercise caution when referring to older documents. For the latest information and historical data, please contact the individual listed to the right.
<--- Return to Archive
For additional information relating to this article, please contact:
September 12, 2024EUROPEAN CENTRAL BANK MONETARY POLICY The European Central Bank (ECB) announced today that it would reduce the three key ECB interest rates. The interest rates on the main refinancing operations, the marginal lending facility and the deposit facility will be at 3.65%, 3.90% and 3.50% respectively effective September 18.
The ECB also released updated projetions today. Over the medium term, global growth is projected to expand at a moderate pace, largely unchanged with the June projections. Global growth is projected to be 3.4% in 2024 and 2025 and by 3.3% in 2026. This reflects stronger growth in major emerging markets as well as higher growth in US and United Kingdom. US economy is still expected to have a soft landing with cooling labor markets and solid privet consumption.
Inflation has continued to fluctuate below 3% in recent months. Year over year inflation was 2.6% in July. Inflation is expected to rise again in the second half of the year as a result of the last year’s drop in energy prices being excluded from the calculation. Wage growth is still persistent, but labour cost pressures are moderating and profits are partially softening the impact of higher wages. Inflation is expected to fluctuate around the current level in the short term and then decline towards the target in the second half of next year. Core inflation is expected to decline to 2.3% in 2025 and to 2.0% in 2026.
The Euro Area economy started to recover in the first half of 2024, though economic activity is still subdued. Real GDP is projected to grow at 0.8% in 2024, 1.3% in 2025, and by 1.5% in 2026. Service sector continues to lead the recovery in part boosted by the Paris Olympics. Weaker demand in Germany has led to a weakening in the manufacturing sector. The economy is expected to continue to recover as real income is pushed up by higher wages and consumption. However, consumption is weaker than was foreseen in the June projections. Foreign demand is supports the outlook for exports and domestic demand is supported by past monetary tightening. Employment growth is projected to slow down in comparison with recent years but the unemployment rate is projected to remain stable.
The asset purchase programme (APP) portfolio is declining at a measured and predictable pace, as the Eurosystem does not reinvest all principal payments from maturing securities. The Governing Council no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP). It intends to reduce the PEPP portfolio by €7.5 billion per month on average. The Governing Council means to discontinue reinvestments under the PEPP at the end of 2024.
The Governing Council notes that future policy rate decisions will be based on its assessment of the inflation outlook (including the dynamics of underlying inflation), incoming economic and financial data, and the strength of monetary policy transmission.
The next scheduled monetary policy meeting will be on October 17, 2024.
Source: European Central Bank: Monetary Policy Decisions, ECB Macroeconomic Projections
<--- Return to Archive
