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The bank of the 20 countries that share the euro as their currency raised rates by 25 basis points, to 3.75%. This is the seventh time that the entity has increased interest rates since it launched a tighter monetary policy in July 2022. The decision on May 4 follows the trend of the US Federal Reserve, which also did the same. own a day before.
In 15 years the price of money in the Eurozone has never been so high. The European Central Bank (ECB) began raising its interest rates in July of last year, taking it to 3.5% prior to Thursday’s decision.
The entity argued that the inflationary pressure is still outside its objective, especially with the latest data in which the variation of the Consumer Price Index (CPI) reached up to 7% annually in April in the Euro Zone.
We’ve just taken our latest monetary policy decisions, determining what’s needed to achieve stable prices in the euro area.
Tune in to #TheECBPodcast to hear President Christine @Lagarde present the decisions in our press conference https://t.co/CfKiT7yBbi
—European Central Bank (@ecb) May 4, 2023
The ECB stressed that “inflation prospects remain too high and have been for too long“ and that for this reason he decided to raise interest rates more because “although headline inflation has fallen in recent months, underlying price pressures remain strong“.
Prior to Thursday’s increase, the lender had raised benchmark rates by 50 basis points three times in a row, and Thursday’s rise of just a quarter point responds to a drop in year-on-year core inflation.
With the change, the reference rate remains at 3.75% and the deposit facility rate at 3.25%.
ECB President Christine Lagarde, He said that the path of increases is not over and that managers “will know what the sufficiently restrictive interest rate is when we get there.”
“Future Governing Council decisions will ensure that key interest rates are set at levels restrictive enough to bring inflation back to the 2% medium-term objective in a timely manner and remain at those levels for as long as possible. that is necessary“determined the entity.
with Reuters
