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As expected, the European Central Bank (ECB) raised its key interest rate for the eighth consecutive time today. With a 0.25 percent increase, the key interest rate is now 4 percent.
ECB President Christine Lagarde recently stated that price pressure is persistently high, and the ECB wants to ensure that key interest rates are “bred to a sufficiently restrictive level”. Because high interest rates make loans more expensive to balance inflation rates and curb demand. This is still very high in the Eurozone.
Specifically, the ECB Governing Council decided to increase the ECB’s three core interest rates by 25 basis points. Accordingly, effective from 21 June 2023, the interest rate for main refinancing transactions will be increased to 4.00%, for marginal lending facilities to 4.25% and for deposit facilities to 3.50%.
Inflation target too far
Overall, the EU’s inflation target is still expected to be a long way off. EU experts predict that the average headline inflation will be 5.4 percent this year, 3.0 percent in 2024 and 2.2 percent in 2025. Indicators of fundamental price pressures remain strong, although some early signs are showing weakness.
In contrast, the US Federal Reserve kept interest rates unchanged yesterday, leaving the base rate unchanged at 5.25 percent.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
