Monetary policy decisions

Monetary policy decisions

2 February 2023

The Governing Council will keep the course in elevating rates of interest considerably at a gentle tempo and in conserving them at ranges which can be sufficiently restrictive to make sure a well timed return of inflation to its 2% medium-term goal. Accordingly, the Governing Council as we speak determined to lift the three key ECB rates of interest by 50 foundation factors and it expects to lift them additional. In view of the underlying inflation pressures, the Governing Council intends to lift rates of interest by one other 50 foundation factors at its subsequent financial policy assembly in March and it’ll then consider the next path of its financial policy. Keeping rates of interest at restrictive ranges will over time cut back inflation by dampening demand and also will guard towards the chance of a persistent upward shift in inflation expectations. In any occasion, the Governing Council’s future policy price decisions will proceed to be data-dependent and comply with a meeting-by-meeting strategy.

The Governing Council as we speak additionally selected the modalities for decreasing the Eurosystem’s holdings of securities beneath the asset buy programme (APP). As communicated in December, the APP portfolio will decline by €15 billion monthly on common from the start of March till the top of June 2023, and the next tempo of portfolio discount shall be decided over time. Partial reinvestments shall be carried out broadly according to present observe. In specific, the remaining reinvestment quantities shall be allotted proportionally to the share of redemptions throughout every constituent programme of the APP and, beneath the general public sector buy programme (PSPP), to the share of redemptions of every jurisdiction and throughout nationwide and supranational issuers. For the Eurosystem’s company bond purchases, the remaining reinvestments shall be tilted extra strongly in the direction of issuers with a greater local weather efficiency. Without prejudice to the ECB’s value stability goal, this strategy will help the gradual decarbonisation of the Eurosystem’s company bond holdings, according to the targets of the Paris Agreement.

The detailed modalities for decreasing the APP holdings are described in a separate press launch to be revealed at 15:45 CET.

Key ECB rates of interest

The Governing Council determined to lift the three key ECB rates of interest by 50 foundation factors. Accordingly, the rate of interest on the principle refinancing operations and the rates of interest on the marginal lending facility and the deposit facility shall be elevated to three.00%, 3.25% and a pair of.50% respectively, with impact from 8 February 2023.

Asset buy programme (APP) and pandemic emergency buy programme (PEPP)

The Governing Council intends to proceed reinvesting, in full, the principal funds from maturing securities bought beneath the APP till the top of February 2023. Subsequently, the APP portfolio will decline at a measured and predictable tempo, because the Eurosystem is not going to reinvest the entire principal funds from maturing securities. The decline will quantity to €15 billion monthly on common till the top of June 2023 and its subsequent tempo shall be decided over time.

As considerations the PEPP, the Governing Council intends to reinvest the principal funds from maturing securities bought beneath the programme till not less than the top of 2024. In any case, the longer term roll-off of the PEPP portfolio shall be managed to keep away from interference with the suitable financial policy stance.

The Governing Council will proceed making use of flexibility in reinvesting redemptions coming due within the PEPP portfolio, with a view to countering dangers to the financial policy transmission mechanism associated to the pandemic.

Refinancing operations

As banks are repaying the quantities borrowed beneath the focused longer-term refinancing operations, the Governing Council will commonly assess how focused lending operations are contributing to its financial policy stance.


The Governing Council stands prepared to regulate all of its devices inside its mandate to make sure that inflation returns to its 2% goal over the medium time period. The Transmission Protection Instrument is out there to counter unwarranted, disorderly market dynamics that pose a critical menace to the transmission of financial policy throughout all euro space nations, thus permitting the Governing Council to extra successfully ship on its value stability mandate.

The President of the ECB will touch upon the issues underlying these decisions at a press convention beginning at 14:45 CET as we speak.