The ECB raised the key rate for the seventh time in a row
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The European Central Bank (ECB) raised the key rate by 25 basis points — from 3.5% to 3.75% — at a meeting on Thursday, May 4, according to the press release of the regulator.
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This is the maximum rate since 2008. The ECB raised borrowing rates for the seventh time in a row. The ECB’s decision coincided with the expectations of economists polled by Reuters.
The interest rate on the main refinancing operations and interest rates on the margin credit line and deposit line will be increased to 3.75%, 4% and 3.25%, respectively, from May 10, 2023.
The European regulator has slowed down the rate increase: at the previous meeting, it was increased by 50 bps.
“Today’s increase is the smallest in the current cycle, which indicates that the ECB has entered the final stage of this tightening cycle,” Karsten Brzeski, responsible for global macroeconomic analysis at ING, wrote in this regard. — In the current very difficult macroeconomic situation with the delayed impact of previous increases, banking shocks, sluggish economic growth, but still high inflation, the ECB will act more cautiously.
Read: The Fed raised the interest rate for the tenth time in a row
The ECB, like most other major central banks, is trying to bring down record inflation rates and get closer to its target level of 2%. In total, since July last year, the ECB has raised the interest rate by 375 basis points.
Inflation in the Eurozone
Inflation in the Eurozone accelerated last month, but basic price growth slowed down. According to Eurostat’s preliminary estimate, overall price growth in the 20 countries using the euro accelerated to 7% in April compared to 6.9% a month earlier. The data came out in accordance with the expectations of economists polled by Reuters. Excluding food and energy prices, core inflation (CPI Core index) slowed from 7.5% to 7.3%.
The highest annual inflation in April was in Latvia (15%), Slovakia (14%) and Lithuania (13.3%). The lowest inflation was recorded in Luxembourg (2.7%), Belgium (3.3%) and Spain (3.8%).
The ECB started raising interest rates in July last year, for the first time in 11 years.
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Editor of the news feed Yaroslav Holoborodko Writes on the topics: Macroeconomics, stock market, cryptocurrency
- Inflation
- Accounting rate
Source: Ministry of Finance
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