The ECB raises interest rates by another 0.5% as inflation begins to show positive signs


The European entity continues with its roadmap and ensures that “there is still ground to be gained” to lower prices

At the last meeting of the Governing Council of the European Central Bank (ECB), President Christine Lagarde warned that rate hikes would continue in 2023. This was confirmed at the meeting of the European entity in Frankfurt this Thursday, which has made money more expensive again by another 0.5%, raising interest rates to 3%. All this with inflation that, despite the continued explosion, is starting to show positive signs. Eurozone interest rates fell to 8.5% in January, marking the third straight month on the cut path and supporting the ECB’s monetary policy.

As recently confirmed by Klaas Knot, a member of the ECB’s council, “we are still a long way off” from cutting the rate hike, which could continue at the 50 basis point pace at least until the March meeting. At this point, the entity has not provided any guidance on where it will place the ceiling on increases, although the message remains that “there is still a lot of work to be done” to reach the target of bringing inflation back to 2%. in the medium term. “Rice rises are our best tool to achieve this goal,” Lagarde noted in December, a strategy that “will be sustained over the long term.”

In any case, the French company insists that the decisions of the ECB will be taken “meeting by meeting” on the basis of the available data. The entity sees the ‘peak’ of prices approaching, although it anticipates a possible recovery in inflation in February, when the natural gas supply season begins. All in all, he expects prices to fall “very gradually” throughout the year.

The European bank is also following in the footsteps of the US Federal Reserve, which approved its eighth rate hike on Wednesday. On this occasion, the US entity limited itself to an increase of 25 basis points after four increases of 75 points. The decision keeps interest rates between 4.5 and 4.75%, the highest level since September 2017. However, like the ECB, they warn that “we have more work to do”.

Source: La Verdad


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