After 10 interest rate hikes: ECB boss Lagarde suspends interest rates

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The European Central Bank (ECB) is taking a break from interest rates for the first time after ten consecutive interest rate hikes. The central bank announced this following a foreign council meeting in Athens on Thursday afternoon. The key interest rate in the Eurozone is 4.5 percent.

Inflation in the Eurozone has weakened in recent months. At the same time, concerns about the economy are increasing, given the geopolitical situation created by the wars in the Middle East and Ukraine. This led monetary authorities to wait before raising interest rates again.

European Central Bank President Christine Lagarde (67) had signaled that there might be a break in interest rates after the last interest rate increase in September. But observers were unsure until the end.

Jordan is one step ahead of Lagarde

The ECB started raising interest rates in the summer of 2022. The interest rate increases were triggered by the war in Ukraine, rising energy prices and resulting rising inflation. Central banks influence inflation through key interest rates: higher interest rates make loans more expensive. This slows demand and puts less money into circulation; This balances inflation. But monetary authorities must strike a difficult balance: If they raise interest rates too much, they will stifle economic growth in the worst-case scenario.

The ECB targets 2 percent inflation. Currently it is 4.3 percent. Inflation in Switzerland is currently at 1.7 percent, considerably lower than in the euro area. Accordingly, the Swiss National Bank (SNB) paused interest rates earlier than its European counterpart: SNB boss Thomas Jordan (60) left interest rates at 1.75 percent in his last key interest rate decision in September.

Source :Blick