For the tenth time in a row, the European Central Bank has raised interest rates in an attempt to cool inflation despite slowing growth in the eurozone.
At its meeting today, the ECB decided to raise the interest rate on deposits by 25 basis points to a record high of 4%. By 25 basis points, the interest rate on the main refinancing operations, as well as the interest rate on the marginal credit facility, will be raised to 4.50% and 4.75%, respectively, starting from September 20, 2023.
In a statement, the ECB signaled it may have raised interest rates high enough to bring inflation back to target, although it did not rule out further rate hikes.
“Inflation continues to fall, but is still expected to remain too high for too long. The Governing Council is determined to ensure its timely return to the medium-term target of 2%. To consolidate progress towards its target, it decided today to raise by 25 basis points the three key ECB interest rates,” the ECB said in a statement.
Financiers were divided on whether the ECB would raise interest rates once again or opt for a pause in the tightening cycle given signs of a weakening economy, the Financial Times previously reported.
According to data from the Statistical Office of the European Union, in the second quarter the economy of the Eurozone expanded by 0.1% compared to the previous three months, which is the same as in the first quarter. Eurozone consumer prices rose 5.3% in August, the same as in July.
This week, the European Commission lowered its forecast for economic growth in the euro area for 2023 to 0.8% from a previously expected 1.1%, and for 2024 to 1.3% from 1.6%. The forecast for inflation in the Eurozone (the HIPC index) for this year was lowered to 5.6% from 5.8%, and for next year – raised to 2.9% from 2.8%.
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2023-09-14 12:48:12
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