The trend of continued interest rate rises was halted this Thursday by the ECB. The Governing Board meeting today decided to raise the interest rate applied to refinancing to 2.5% and the rate applied to deposits to 2%, as of December 21.
Thus, “based on the substantial upward revision of the inflation outlook, it expects to continue raising interest rates. More specifically, the Governing Council considers that interest rates still need to rise significantly at a steady pace, to reach levels that are restrictive enough to ensure a timely return of inflation to the 2% target in the medium term,” it said. the ECB in a statement.
According to the European regulator, “keeping interest rates at restrictive levels, over time, will reduce inflation by curbing demand, and will also protect against the risk of a persistent increase in inflation expectations.”
Despite the increase, December’s decision is more restrained than two months ago when the ECB went ahead with a 75 basis point hike in benchmark rates. October’s increase was the second consecutive 75 basis point increase and the third since July, aimed at halting the escalation of inflation.
The ECB wants to ensure the timely return of inflation to the medium-term target of 2%.
News updated at 13:35
Source: TSF
