FRANKFURT, Feb. 22 (Xinhua) -- For the first time since 2004, the European Central Bank (ECB) announced on Thursday an annual loss for 2023 following almost two decades of substantial profits.
The bank reported a loss of nearly 1.3 billion euros (1.4 billion U.S. dollars) last year after the release of 6.6 billion euros from provision for financial risks, the ECB said in a press release.
The ECB said the loss reflects the "necessary monetary policy actions of the Eurosystem" in the fight against high inflation with the many consecutive interest rate hikes since July 2022. Since October last year, the three key interest rates have been kept at historically high levels.
The rise in key interest rates increased the interest expenses for the ECB's variable-rate liabilities, but the income from the assets did not rise to the same extent or at the same pace, as many had fixed interest rates and long maturities, ultimately resulting in a loss, according to the central bank.
Furthermore, the bank also expected losses "in the next few years" and only then will there be "sustainable profits" again.
The ECB vows to effectively fulfill its primary mandate of maintaining price stability, regardless of any losses incurred.
The accounts of the European Central Bank's January policy meeting published on the same day showed a broad consensus among Governing Council members that it was "premature to discuss rate cuts."
The ECB will want to hold off on easing the current monetary policy restrictions until first-quarter data reveals a small economic rebound, a decline in inflationary pressure, and no acceleration of wage growth, according to analysts at ING. (1 euro = 1.08 U.S. dollar)
