Europe's Central Bank Holds, Its Chief Heads for the Exit, and Bond Markets Get Nervous. What It Means for Americans
The ECB kept rates at 2.5% on Thursday with inflation at 3.8%, while Christine Lagarde announced she will leave early to speak freely. The contrast with a U.S. economy the Fed calls "expanding at a strong pace" is worth noticing.
By Clara Hughes
Thursday was a busy day in Frankfurt. The European Central Bank left interest rates unchanged, and its president, Christine Lagarde, announced she will step down more than eight months before her term was due to end. Taken together, the two moves say a great deal about the state of Europe's economy. They also matter to American savers, investors and exporters, because financial stress in a 21-country currency bloc does not stay overseas. What the ECB decided The ECB's Governing Council held its three key rates on October 29: 2.50% on the deposit facility, 2.65% on main refinancing operations and 2.90% on the marginal lending facility, according to the bank's monetary policy statement. That hold came with inflation well above target. The ECB said euro-area inflation rose to 3.8% in September from 3.2% in August. Energy prices drove much of it, with energy inflation at 18.9%. Excluding energy, inflation was 2.3%, and services inflation was 3.2%. Euronews reported that the ECB has already raised rates twice this year, most recently in September, as energy prices rose during the Iran war. Lagarde made