In its fight against escalating inflation, the European Central Bank (ECB) is no longer raising interest rates as sharply as it has recently. The monetary authorities around the head of the central bank, Christine Lagarde, decided on Thursday – as expected by stockbrokers – to raise the key rate by 0.50 point to 2.50 percent. The deposit rate, which determines the financial markets, was raised by the same amount to 2.00 percent.
It is the fourth rate hike in a row. In September and October, the ECB raised interest rates in huge steps of 0.75 percentage points each.
The currency watchdogs also indicated that they are ready for further interest rate hikes. “The interest rate decisions of the Governing Council of the ECB will continue to depend on available data and will be decided on a meeting-by-meeting basis,” it added.
Central bank balance sheet needs to be addressed
The ECB also announced that it would begin winding down the central bank’s balance sheet, which had been swollen by years of bond purchases, from early March. That has now grown to 8.5 trillion euros. The bond portfolio of the two large asset purchase programs APP and PEPP alone, which have recently ended, amounted to approximately EUR 5 trillion.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
