01:15 PM GMT, Euro Zone - ECB Interest Rate Decision for December:
- actual 3.15%; forecast 3.15%; previous 3.40%;
The ECB held rates steady, cutting the deposit rate to 3% and the main interest rate to 3.15%, in line with expectations. The ECB dropped the term "restrictive," signalling a less aggressive stance, but refrained from committing to a specific rate path.
- Inflation forecasts align with the 2% target by 2026, but domestic inflation remains elevated due to delayed wage adjustments.
- Growth projections are downgraded, with domestic demand expected to rebound gradually as policy effects fade.
- PEPP portfolio is declining by €7.5 billion/month as reinvestments stop.
- Traders maintain expectations for 127 bps of rate cuts by 2025.
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