This Thursday, the European Central Bank (ECB) raised official interest rates by 25 basis points, raising the principal to 3.5%.
The interest rate for the main financing operations amounted to 4%, the deposit facility rate to 3.50% and the interest rate applicable to the marginal credit facility to 4.25%.
The new rise of 25 basis points was already expected by the market, after, at the beginning of May, the institution led by Christine Lagarde had already raised rates 25 basis points to 3.75%, a slowdown supported by the majority of the members of the Council.
The ECB began to raise its interest rates in July of last year, having previously approved several increases of 50 and 75 basis points, which until today add up to 375 basis points.
The Governing Council of the ECB considers that the previous increases in interest rates “are having a strong impact on financing conditions and are having a gradual impact on the economy as a whole”.
“Future ECB Governing Council decisions will ensure that the ECB’s benchmark interest rates are set at levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term objective and remain at these levels for as long as it takes.” , he adds.
The ECB notes that it “will continue to follow a data-driven approach to determine the appropriate level and duration of adjustment.”
The Governing Council also confirms that it will suspend reinvestments under the Asset Purchase Program (APP) as of July 2023, noting that by the end of June the decrease in the APP portfolio will amount, on average, to 15,000 million euros. monthly.
Regarding the pandemic emergency purchase program (PEPP), the Governing Council “intends to reinvest principal payments on maturing securities purchased under the program until at least the end of 2024.”
This Thursday’s decision will be explained at a press conference by ECB President Christine Lagarde at 1:45 p.m. (Lisbon time).
Source: TSF
