The ECB raises interest rates to 3%: There will be more increases
What was an open secret, the European Central Bank has confirmed that interest rates in the eurozone rise to 3%, further tightening monetary policy. With the increase of 50 basis points, the ECB exceeded the Federal Reserve of the United States for the first time in 10 years, which, although it also raised them, did so to a lesser extent.
Translated, the monetary institution hardens the cost of money again, despite the fact that inflation in Europe begins to subside. Eurozone inflation eases to 8.5% in January, but core inflation remains at record levels. The year-on-year inflation rate in the euro area stood at 8.5% in January, which implies a drop of seven tenths compared to 9.2% in December, according to preliminary information published by the community statistical office, Eurostat. .
All in all, the rise has been 50 basis points and the ECB has left the deposit rate at 2.5%, the main refinancing rate at 3% and the emergency window at 3.25% , levels not seen since 2008.
The ECB’s tough tone is because “the economy is doing better thanks to strong labor markets and ‘very strong’ wage growth expectations. While ECB staff macroeconomic projections to be released on March 16 (and subsequent data) will be critical in charting the course of policy beyond March, ECB President Christine Lagarde does not rule out the possibility that the terminal rate is even higher (i.e. 4%).
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