ECB raises base rate to 4%
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The European Central Bank (ECB) raised its key rate by 25 bp. up to 4%. About it reported on the regulator’s website.
The decision to raise rates on June 15 was made by the Board of Governors of the ECB. At 25 b. also increased rates on deposits and margin loans – up to 4.25% and 3.50% respectively. The decision comes into effect on June 21.
The ECB raises rates for the eighth time in a row. Last time, the board decided to promotion base rates by 25 bp. n. in May.
The regulator notes that, according to June forecasts, headline inflation in 2023 in the Eurozone will be 5.4%, in 2024 – 3%, in 2025 – 2.2%. At the same time, economic growth forecasts for this and next year were lowered from 1.1% to 0.9% and from 1.6% to 1.5%, respectively. In 2025, an increase of 1.6% is expected.
“Future decisions by the Governing Council will ensure that the key interest rates of the ECB are brought to levels sufficiently restrictive to achieve a timely return of inflation to the medium-term target of 2%, and will be held at these levels for as long as necessary,” the ECB said.
The eurozone economy shrank by 0.1% in 2023 Q1. Representative of the European Commission (EC) Werle Newts 8 June confirmed the start of a recession. The decline in collective GDP in the euro area is the second quarter in a row. A similar trend was recorded in the fourth quarter of 2022.
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