- Main refi rate at 3.50% vs 3.00% prior
- Inflation projected to remain too high for too long
- Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior
- Deposit facility to 3.00% vs 2.50% prior
- Elevated level of uncertainty reinforces importance of a data-dependent approach to ECB policy decision, which will be determined by its assessment of inflation outlook in light of incoming data and dynamics
- Inflation ex food and energy continued to increase in Feb and staff expect average of 4.6% in 2023, higher than Dec forecasts
- Forecasts done before market turmoil
- Headline inflation expected to average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025
- Banking sector sector is resilient, with strong capital and liquidity positions
- Policy toolkit is fully equipped to provide liquidity support to eurozone financial system if needed
- Growth forecast of 1.0% in 2023, 1.6% in 2024, 1.6% in 2025
There's no signal on future policy here, which is understandable but the market would have liked something dovish to go with 50 bps. The euro is about 20 pips lower on the headlines while stock futures have sagged.