PRESS RELEASE

Monetary policy decisions

27 April 2000

Following the regular examination of the outlook for price developments in the euro area on the basis of the latest information on monetary, financial and other economic developments, the Governing Council of the ECB took the following monetary policy decisions at today's meeting:

  1. The interest rate on the main refinancing operations of the Eurosystem will be raised by 0.25 percentage point to 3.75%, starting from the operation to be settled on 4 May 2000.

  2. The interest rate on the marginal lending facility will be raised by 0.25 percentage point to 4.75%, with effect from 28 April 2000.

  3. The interest rate on the deposit facility will be raised by 0.25 percentage point to 2.75%, with effect from 28 April 2000.

With today's decision, the Governing Council of the ECB continues its policy of reacting to upside risks to price stability in the medium term in a pre-emptive manner. In this way, monetary policy provides the best contribution to ensuring the sustainability of the current phase of strong and non-inflationary economic growth.

In its discussions the Governing Council confirmed the assessment which was presented by the President of the ECB in his introductory statement at the press conference after the Governing Council meeting on 13 April, as well as in the following issue of the ECB Monthly Bulletin. In particular, the Governing Council expressed concern about upside risks to price stability which, given the prospects for strong economic expansion, arise from strong growth in monetary and credit aggregates, as well as from the present level of the exchange rate of the euro.

The Governing Council discussed recent movements in the exchange rates between the major currencies, including the recent decline of the euro, and examined their possible implications for price stability in the euro area. The ECB judges that the present level of the euro does not reflect the strong economic fundamentals of the euro area.

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