Eurozone Monetary Policy


Eurozone: ECB keeps rates unchanged in September

September 5, 2013

At its 5 September meeting, the European Central Bank (ECB) kept the refinancing rate unchanged at the record low of 0.50%, a decision the market had expected. Monetary authorities reiterated the forward guidance adopted in the previous meeting, stating that the refinancing rate will remain, "at present or lower levels for an extended period of time."

The decision comes amid a slightly improved outlook for the Euro area economy. ECB President Mario Draghi acknowledged expectations of a "gradual recovery" in the region. In previous statements, the wording referred to a "stabilisation of economic activity at low levels." In line with the slightly more optimistic tone, the ECB upgraded its GDP forecast for this year and now sees the Euro area economy contracting 0.4% in 2013 (June projection: -0.6%). However, it downgraded its expectations for 2014, and now sees a 1.0% expansion in 2014 (June projection: 1.1%). Nevertheless, downside risks to the outlook remain and are related to, "higher commodity prices in the context of renewed geopolitical tensions, weaker than expected domestic and global demand and slow or insufficient implementation of structural reforms in euro area countries."

Regarding the outlook for price developments, the Bank maintains the view that risks are in balance. Inflation is expected to, "remain low in the coming months." Against this backdrop, the ECB expects inflation to average 1.5% in 2013 (June projection: 1.4%) and 1.3% in 2014 (June projection: 1.3%)

Within this setting, FocusEconomics panelists expect the policy rate to end 2013 at 0.46% and 2014 at 0.48%.

Author:, Head of Data Solutions

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