It will be the first increase in the past 11 years. In addition, the entity will raise interest rates again in September and does not rule out an increase of 50 basis points if high inflation continues.
The Governing Council of the European Central Bank (ECB) is today, Thursday, to implement the first rate hike in the eurozone since July 2011, ending an era in eurozone monetary policy in the face of runaway inflation and the uncontrolled decline in the price of the euro against the dollar in recent months as a result of, among other things, the war in Ukraine.
This first increase, which will affect the three rates managed by the central bank (deposit, refinancing and loan), was telegraphed by the ECB at its previous meeting in June, so save for an unexpected surprise, which made a difficult statement. would be 25 basis points. The entity will increase the cash price again in September, but how much is not yet clear; It depends on the inflation data.
In addition to confirming the announcement of the first rate hike in the eurozone, the Governing Council meeting will also be another important item as the details of the anti-fragmentation plan the ECB is working on are announced.
In recent months, the ECB has reduced the Purchase volume under the purchase of public assets. In April, it acquired assets worth 40 billion, while it grew to 30 billion in May and reduced its volume to 20 billion in June.
Christine Lagarde, president of the European Central Bank, revealed in her introductory speech at the symposium in Sintra (Portugal) on June 28 that the ECB will raise the three main interest rates in the eurozone by 25 basis points. In addition, Lagarde acknowledged that the ECB could be more aggressive and forget gradualism as inflation expectations begin to anchor. “It is likely that the entity will be able to exit negative interest rates by the end of the third quarter. As we have already shown, we will deploy other existing instruments or instruments necessary to prevent fragmentation from taking the right place. transferring monetary policy,” he added.
According to the ECB, the start of the upward cycle of the money price should be “orderly, avoiding unnecessary surprises for the markets and unwanted volatility”. For example, the European monetary entity does not rule out “unfavorable short-term economic surprises” and therefore considers it wise not to start with more strength.
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Source: EITB
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.
