The zero-interest policy is over: the European Central Bank (ECB) is raising interest rates in the euro area in view of record inflation. The key interest rate unexpectedly rises sharply from 0.0 to 0.5 percent. The deposit rate was also increased – to 0.00 percent. Banks no longer have to pay extra if they park excess money at the ECB.
The turnaround in interest rates after an era of ultra-easy monetary policy is considered historic. At the same time, the EU’s monetary authorities have agreed on a new crisis program that will allow the ECB to help highly indebted countries such as Italy, which is also currently experiencing a political crisis, from bond market turbulence.
The new instrument should help to ensure that monetary policy can have an even effect in the euro area and that the financing costs of individual euro countries do not diverge. The ECB therefore speaks of an instrument against the fragmentation of the eurozone.
However, experts point out that the ECB could find itself in legally dangerous waters if, for example, Italy were to be supported amid an acute government crisis. This would be grist to the mill of all those critics, especially in Germany, who accuse the ECB of secret state financing
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
