European Central Bank Raises The Interest Rate By 75 Basis Points As Expected

European Central Bank Raises The Interest Rate By 75 Basis Points As Expected
  • ECB has raised the interest rate by 75 bps to 1.25%, in line with the expectations.
  • It hiked the Deposit Facility rate by 75 bps to 0.75%, higher than the expected 0.50%.
  • Its Marginal Lending Facility rate now stands at 1.50%.
  • It aims to ensure the timely return of inflation to the ECB’s 2% medium-term target.
  • Based on its current assessment, the Governing Council expects to raise interest rates further over the next several meetings to dampen demand and guard against the risk of a persistent upward shift in inflation expectations.
  • Looking ahead, ECB staff have significantly revised their inflation projections, and inflation is now expected to average 8.1% in 2022, 5.5% in 2023, and 2.3% in 2024.
  • In July, ECB hiked the rate by 50 bps to 0.5% from the previous 0% beating the expectations of 0.25% to prop up the ailing euro.
  • Photo via Wikimedia Commons

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