The European Central Bank left interest rates at 4%, snapping a record streak of 10 rate hikes, as weak earnings have plagued eurozone countries.
The European Central Bank (ECB) left interests rates untouched for the first time in more than a year at a meeting in Athens on Thursday.
The ECB said it would leave key rates unchanged at between 4 and 4.75%.
"The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.50%, 4.75% and 4.00% respectively," read a statement released by the bank Thursday.
The bank has raised the lending rate 10 times since July 2022, in an effort to halt surging inflation, which peaked at 10.6% in Europe in October of last year but has since dropped to 4.3%.
ECB says rate hikes working to fight inflation
The ECB sets monetary policy for the 20 countries of the eurozone. It said data suggests its policies are working and gave the bank confidence that inflation would eventually be brought down to its target of 2%.
"The Governing Council's past interest rate increases continue to be transmitted forcefully into financing conditions," read the ECB statement, "This is increasingly dampening demand and thereby helps push down inflation."
The ECB's position mirrors the approach of the US Federal Reserve and the Bank of England in holding steady.
Eurozone countries have been battered by inflation and the effects of Russia's war in Ukraine, which pushed energy, food and electricity prices higher, stifling consumer spending as households have watched their savings melt away.
Now, on the heels of the coronavirus pandemic, supply chain shortages and the war in Russia, sluggish earnings numbers across the bloc suggest a risk of recession. On top of that, fears of a widening conflict across the Middle East have spooked investors concerned about what that could mean for oil supply.
European growth dampened
Rising borrowing costs have shown signs of weighing on the economy in the eurozone. In Europe, third-quarter earnings reports have been dismal as prior interest rate hikes have smothered growth.
The EU will publish its third-quarter figures Tuesday, but markets are already losing ground as the bloc looks likely to post anemic numbers. Germany, for instance, Europe's largest economy, looks set to become the bloc's worst performing, with the International Monetary Fund (IMF) forecasting a 0.5% contraction this year.
A range of German companies as diverse as chip manufacturer Aixtron and meal-kit company HelloFresh, as well as several automakers, all posted third-quarter losses Thursday. Marquis brand Mercedes-Benz, for instance, logged a whopping 5.5% drop in earnings.
Stock markets across the bloc all posted losses Thursday ahead of the ECB's decision. And Europeans were not alone, with Wall Street as well as Asian stock exchanges also losing ground.
Source: DW
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