The ECB raises its rates by 0.75 points, an unprecedented magnitude
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This major decision should make it possible to fight against inflation.
After an initial increase of 0.50 point in July, the Governing Council of the European Central Bank (ECB) announced on Thursday a new unprecedented increase in its key rates, of the order of 0.75 point. “This important measure anticipates the transition from the currently very accommodative level of key rates to levels that will ensure that inflation returns to the ECB’s medium-term target of 2% as soon as possible.“, justifies the international organization, which underlines that the latter remains “much too high“.
Read alsoThe ECB’s bitter potion for the economy
In addition, further rate hikes are expected in the coming months: “The Governing Council plans to continue raising interest rates in its upcoming meetings“, specifies the ECB in a press release. The institution now expects inflation of 8.1% in 2022, compared to 6.8% in June. For 2023 and 2024, euro keepers predict 5.5% and 2.3% respectively, still above the 2% target.
At the same time, the Board of Governors noted the “substantial slowdownof growth in the euro zone, hit hard by inflation and the consequences of the war in Ukraine. Activity should stagnate between now and the end of the year and the beginning of 2023, adds the ECB press release: growth forecasts are therefore revised downwards, reaching “3.1% in 2022, 0.9% in 2023 and 1.9% in 2024“. The organization justifies its decision by:very high energy prices» as well as by «supply bottlenecks“.
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