Inflation has not yet slowed down sufficiently.
European the central bank (EKP) decided on Thursday to keep the key interest rates unchanged as expected.
“Inflation has slowed down even more after the January meeting of the ECB Council. In the ECB's most recent expert estimates, inflation has been revised downwards, especially for 2024. This is mainly due to the fact that the impact of energy prices on inflation has decreased,” the council that decides on monetary policy states in its statement.
Financial conditions are tight in the euro area, and previous interest rate hikes continue to dampen demand. This will help slow down inflation, the council states.
In February according to preliminary data, inflation in the euro area was 2.6 percent. According to the central bank's price stability target, it should be two percent in the medium term.
Within a year and a half, inflation in the euro area has slowed down considerably. It was at its peak in October 2022, when prices rose by 10.6 percent from a year earlier.
The main reasons for the slowdown in inflation are the significant tightening of monetary policy and the easing of the energy crisis and international supply disruptions.
The tightening of monetary policy typically takes about a year to have its full effect on slowing inflation. The ECB last raised key interest rates in September.
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