The European Central Bank (ECB) decided, this Thursday, December 15, raise interest rates half a point, until the 2.5%, its highest level since December 2008, and anticipates “keep increasing them“to contain the inflation.
After the meeting of the Governing Council, the ECB reported in a statement that it also increases the credit facility, which lends to banks overnight, by 50 basis points, up to 2.75%, and the deposit facility, to which remunerates the excess reserves to one day, up to 2%.
“The Governing Council estimates that interest rates will still have to be increased significantly at a sustained pace until they reach sufficiently restrictive levels to ensure that they return to the 2% medium-term objective in a timely manner“, says the statement.
According to the ECB, keeping interest rates at restrictive levels will reduce inflation by moderating demand and will also serve as a protection against the risk of a persistent upward shift in inflation expectations.
He stressed that future Governing Council decisions on official interest rates will continue to be data driven and will follow a decision-making approach at each meeting.
It’s about the fourth consecutive climb of the rates undertaken by the ECB, after those of July, September and October, with which it intends to contain inflation in the eurozone, which in November fell for the first time in 17 months until the 10%, after in October it marked a maximum in October at 10.6%.
underlying inflation, however, it was unchanged at 5% yoy.
The ECB, in its last monetary policy meeting of the year, thus meets market expectations and lifts its foot off the accelerator after the last two rate hikes, which were 75 basis points.
Lower your growth forecast
The eurozone economy could contract this quarter and the next due to high energy prices, but it should still achieve some growth by 2023, the ECB announced.
The bank forecasts growth of 0.5% by 2023, lower than its previous forecast of 0.9%. For 2024, the institution forecasts stronger growth than 1.9%.
The ECB is the central bank of the eurozone.
Bank of England also raises rates
The Bank of England (BoE) raised its interest rates to 3.5%, its highest level in 14 years, with the aim of fight inflation in the country.
The Bank’s monetary policy committee voted in favor of “raise the interest rate by 0.5 percentage points“The British institution reported in a statement.
The announced increase is lower than that of November, when it was increased by 0.75 percentage points, although “further increases may be necessary“, he pointed.
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