The Governing Council of the ECB decided a while ago to move on new increase (the ninth in a row since July last year) by 0.25% despite the ongoing revision of the economy’s growth rate.

After the new increase, the key ECB deposit rate set at 4%and this for the main refinancing operations at 4.5%.

This decision of the Board of Directors, as stated in the relevant announcement, reflects it the Board’s assessment of the outlook for inflation in light of incoming economic and financial data, underlying inflation dynamics and the strength of monetary policy transmission.

September’s macroeconomic forecasts of ECB staff for the euro area see average inflation to 5.6% in 2023 (up from 5.4% forecast by ECB economists in June), 3.2% in 2024 (from 3% in June) and 2.1% (2.2% in June) in 2025.

It’s about upward revision for 2023 and 2024 and downward revision for 2025.

The upward revision to 2024 mainly reflects a higher course for energy prices.

Underlying price pressures remain highalthough most indicators have started to decline.

The Board’s previous rate hikes continue to be strongly transmitted.

Financing conditions have become even tighter and are increasingly restricting demand, which is an important factor in bringing inflation back to the target. With the growing impact of this tightening on domestic demand and the weakening international trade environment, the ECB significantly lowered its forecasts for economic growth.

They now expect that euro zone economy to grow by 0.7% (from 0.9%) in 2023, 1.0% (from 1.5%) in 2024 and 1.5% (from 1.6%) in 2025.