ECB STATEMENT: Hikes 75bps, says future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach

RATES: 

• Says today's decision frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB’s 2% medium-term target.
• Following the raising of the deposit facility rate to above zero, the two-tier system for the remuneration of excess reserves is no longer necessary.
• The Governing Council therefore decided today to suspend the two-tier system by setting the multiplier to zero.

GUIDANCE:

• Governing Council expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations.
• Governing Council will regularly re-evaluate its policy path in light of incoming information and the evolving inflation outlook

ASSET PURCHASES:

• Governing Council will therefore continue applying flexibility in reinvesting redemptions coming due in the pandemic emergency purchase programme portfolio, with a view to countering risks to the transmission mechanism related to the pandemic.

ECB Euro Area Real GDP Forecasts (Sep 2022):

• 2022: 3.1% (prev. 2.8%)
• 2023: 0.9% (prev. 2.1%)
• 2024: 1.3% (prev. 2.1%)

ECB Euro Area HICP Forecasts (Sep 2022):

• 2022: 8.1% (prev. 6.8%)
• 2023: 5.5% (prev. 3.5%)
• 2024: 2.3% (prev. 2.1%)

Full ECB statement can be accessed here.