Higher ECB rates helped squelch Europe’s outbreak of inflation in the wake of the pandemic and Russia’s invasion of Ukraine. Higher central bank benchmarks influence borrowing costs throughout the economy, making it more expensive to borrow and spend, and thus taking pressure off prices.

Following the October policy meeting, the ECB announced that it lowered key rates by 25 basis points (bps). With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility, also known as the benchmark interest rate, stood at 3.4%, 3.65% and 3.25%, respectively.