The European Central Bank (ECB) announced on Thursday that it raised its key rates by 25 basis points (bps) following the May policy meeting, as expected.
With this decision, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.75%, 4% and 3.25%, respectively.
Follow our live coverage of the market reaction to the ECB's policy announcements.
Key takeaways from policy statement
"Inflation outlook continues to be too high for too long."
"Overall, incoming information broadly supports assessment of medium-term inflation outlook that ECB formed at its previous meeting."
"ECB's future decisions will ensure that policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to 2% medium-term target and will be kept at those levels for as long as necessary."
"ECB's policy rate decisions will continue to be based on its assessment of inflation outlook in light of incoming economic and financial data, dynamics of underlying inflation, and strength of monetary policy transmission."
"Interest rates remain ECB’s primary tool for setting monetary policy stance."
"In line with these principles, ECB expects to discontinue reinvestments under APP as of July 2023."
"The APP portfolio is declining at a measured and predictable pace, as the Eurosystem does not reinvest all of the principal payments from maturing securities."
"The decline will amount to €15 billion per month on average until the end of June 2023."
Market reaction
EUR/USD came under modest bearish pressure and declined to the 1.1050 area with the initial reaction to the ECB's policy announcements.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to small daily gains above 1.0700
EUR/USD has lost its traction after having climbed toward 1.0750 earlier in the day but managed to stabilize above 1.0700. Mixed performance of Wall Street's main indexes following the consumer confidence data helps the US Dollar hold its ground and caps the pair's upside.
GBP/USD retreats below 1.2400 as US Dollar rebounds
GBP/USD has retraced a small portion of its daily rally and declined below 1.2400 in the American session on Tuesday. Following a bullish start to the day, major equity indexes lost traction and helped the US Dollar stage a rebound while weighing on the pair.
Gold: XAU/USD retakes $1,950 as investors hesitate Premium
Gold price has posted a nice comeback after bottoming for the day at $1,932 a troy ounce, now trading near a daily high of $1,963.48.
Bitcoin whales could prevent BTC price first monthly loss of 2023 through this move
Bitcoin price is inching towards the first monthly loss of 2023. At press time, BTC price is 4.4% below $29,233, its price on May 1. If BTC fails to regain lost ground, the asset is in for its first monthly loss of the year.
Tesla Stock News: TSLA breaks above $200 as Elon Musk visits China
Tesla (TSLA) stock has overcome a major psychological barrier to start the week with shares overcoming the $200 level early Tuesday. A number of tailwinds are aiding the growth stock, which has gained 4.4% to $201.67 in the premarket.