Euro Area Interest Rate1998-2020 Data | 2021-2022 Forecast | Calendar | Historical

ECB officials signaled readiness to adjust all of its instruments to ensure that inflation moved towards its aim in a sustained manner, including by slashing interest rates deeper into negative territory and changing the conditions of the TLTROs, the accounts of the September's meeting showed. Policymakers also said that the near term price pressures would remain subdued owing to weak demand, lower wage pressures, and the euro appreciation; and that on the basis of the current information, the PEPP envelope would likely have to be used in full to provide the necessary accommodation to offset the downward impact of the pandemic on the path of inflation.

The current environment of lower inflation needs to be reflected in the central bank's inflation aim, as the concerns policymakers face are different from those in previous years, ECB President Christine Lagarde said at a press conference on September 30th. "The wider discussion today, however, is whether central banks should commit to explicitly make up for inflation misses when they have spent quite some time below their inflation goals. If credible, such a strategy can strengthen the capacity of monetary policy to stabilize the economy when faced with the lower bound.", Lagarde said. Since 2003, the central bank has targeted an inflation rate “below, but close to 2%”, aiming to curb rising consumer prices. However, a persistent weak inflation amid subdued growth has worried ECB officials in recent years.

The Eurozone economic recovery remains incomplete, uncertain and uneven, and is highly dependent on the evolution of the COVID-19 pandemic and the success of containment policies, ECB President Christine Lagarde told the European Parliament’s ECON committee on September 28th. Lagarde also said that Euro Area real GDP is only expected to recover to pre-crisis levels in late 2022, and that the public health crisis will continue to weigh on economic activity and poses downside risks to the economic outlook. The ECB president reiterated that the bank stands ready to adjust all of its instruments to ensure that inflation moves towards its aim in a sustained manner. On September 10th, the ECB kept its main refinancing rate unchanged at 0% and pledged to buy up to €1.35 trillion worth of debt through June 2021 under its Pandemic Emergency Purchase Programme.

The ECB kept its main refinancing rate unchanged at 0% and pledged to buy up to €1.35 trillion worth of debt through June 2021 under its Pandemic Emergency Purchase Programme on September 10th. The interest rates on the marginal lending facility and the deposit facility will also remain steady at 0.25% and -0.50% respectively. President Lagarde said during the regular press conference the ECB discussed the recent appreciation of the Euro but the bank does not target the exchange rate. Regarding the pandemic programme, policymakers consider it has been efficient and effective but did not announce any changes. Under the new economic projections, the Euro Area economy is seen contracting 8% in 2020, a slight improvement from its June forecast of an 8.7% plunge. The outlook for both 2021 (+5%) and 2022 (+3.2%) was unchanged. Inflation forecasts for 2020 were left at 0.3% but the outlook for 2021 was raised slightly up to 1%. In 2022, inflation is seen at 1.3%, also unchanged from June.