ECB Holds Deposit Rate at 2.25% in July Meeting

The European Central Bank (ECB) held all three policy rates steady at its July 23 monetary policy meeting. The deposit rate remained at 2.25%, the main refinancing rate at 2.40%, and the marginal lending rate at 2.65%. The ECB stated it is monitoring the impact of its June rate hike, when it raised all three rates by 25 basis points. Energy price volatility and ongoing inflation uncertainty were cited as key factors behind the decision to pause.

ECB Maintains Three Policy Rates at Current Levels

In a statement released after the July 23 meeting, the ECB Executive Board announced it "decided to keep all three key ECB interest rates unchanged." The deposit rate was held at 2.25%, the main refinancing rate at 2.40%, and the marginal lending rate at 2.65%. This follows the June decision to raise all three rates by 25 basis points. Prior to the June hike, the ECB had frozen rates for seven consecutive meetings from last June through April this year.

ECB Cites Energy Volatility and Inflation Monitoring

The ECB stated that "energy price outlooks remain highly volatile, but currently show levels close to the baseline scenario in the June Eurosystem staff projections." The central bank noted that "uncertainty remains elevated and the full impact of the energy shock on inflation has not yet fully materialized." The Governing Council said it is "closely monitoring the intensity and duration of this shock, as well as indirect effects and second-round spillovers."

ECB Signals Data-Dependent Approach Without Preset Rate Path

The ECB emphasized that "with today's decision, the Governing Council maintains an appropriate position to navigate the uncertainty arising from the conflict." The central bank stated that "interest rate decisions will be based on assessments of the inflation outlook and associated risks, informed by incoming economic and financial data, underlying inflation dynamics, and the strength of monetary policy transmission." The ECB confirmed it "is not committing to a particular rate path in advance."

FAQ

What did the ECB decide at its July 23 meeting? The ECB held all three policy rates unchanged: the deposit rate at 2.25%, the main refinancing rate at 2.40%, and the marginal lending rate at 2.65%.

Why did the ECB pause rate changes in July? The ECB cited the need to monitor the impact of its June rate hike and ongoing uncertainty from energy price volatility and inflation developments that have not fully materialized.