Thursday, in a slightly surprising move, the ECB raised interest rates by 50 basis points across the board. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.00%, 3.25% and 2.50%, respectively, the central bank said.
While down from Wednesday's highs, spot gold against the euro is still holding on to solid gains in reaction to the ECB's interest rate decision. Spot gold last traded at €1,821.95 an ounce, up 0.51% on the day. The Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area. The euro area banking sector is resilient, with strong capital and liquidity positions. In any case, the ECB's policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy.
Core inflation is expected to average this year at 4.6%, rising 2.5% in 2024 and increasing 2.2% in 2025, according to the projections.