European Central Bank Holds Rate at 1.25%

The European Central Bank maintained the Main refinancing operations rate at 1.25% and the Marginal lending facility at 2.00% and Deposit facility at 0.50%.  The Bank said: "recent economic data confirm the positive underlying momentum of economic activity in the euro area, with uncertainty continuing to be elevated.  All in all, it is essential that recent price developments do not give rise to broad-based inflationary pressures.  Inflation expectations in the euro area must remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term.  Such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area."

The ECB previously also maintained the rate unchanged at 1.25% in May, after raising the rate by 25 basis points to 1.25% in April this year.  The Euro Area reported annual HICP inflation of 2.8% in April, up from 2.7% in March, and above the Bank's inflation target of maintaining inflation below, but close to, 2% over the medium term.

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