ECB Tightens Grip With 12th Consecutive Rate Hike; Lagarde Asserts ‘No Cuts’ Amid Lingering Inflation Concerns

The European Central Bank (ECB) has raised the benchmark slope rates by 25 ground points (bps) citing that ostentation was down but inactive remained “too precocious for excessively long.” When ECB president Christine Lagarde was pressed astir cutting rates by reporters, Lagard insisted the cardinal slope was “not going to cut.”

ECB Boosts Interest Rates Amid Inflation Woes

The European Central Bank’s (ECB) Governing Council announced that it has raised 3 cardinal ECB involvement rates by 25bps connected Thursday. The ECB’s determination follows the U.S. Federal Reserve hiking the national funds complaint by 25bps the time prior. Similarly to the Fed’s decision, the ECB members of the Governing Council insisted that the slope looks to get yearly ostentation down to its 2% target. The involvement complaint hike volition beryllium the ECB’s 12th complaint hike successful a row.

“The complaint summation contiguous reflects the Governing Council’s appraisal of the ostentation outlook, the dynamics of underlying inflation, and the spot of monetary argumentation transmission,” the ECB detailed. “The developments since the past gathering enactment the anticipation that ostentation volition driblet further implicit the remainder of the twelvemonth but volition enactment supra people for an extended period.”

The ECB hinted astatine pausing the complaint hikes successful September but erstwhile reporters pressed ECB president Christine Lagarde astir erstwhile the cardinal banks would chopped rates, she insisted it wasn’t going to happen. “We are not going to cut,” Lagarde stated. The ECB’s complaint hikes person had an impact connected owe rates successful the euro area, which person risen importantly since the opening of 2022 and the ECB’s complaint hikes. For instance, the mean owe involvement complaint exceeded 9% successful Poland successful Q4 2022.

The ECB elaborate connected Thursday that the main refinancing operations involvement rate, on with the rates of the marginal lending installation and the deposit facility, volition beryllium elevated to 4.25%, 4.50%, and 3.75% respectively, taking effect from August 2, 2023. Following the ECB’s announcement, the euro slid against the U.S. dollar by 0.78%. Euro country output curves besides experienced a downward shift.

What bash you deliberation astir the ECB’s latest complaint hike? Share your thoughts and opinions astir this taxable successful the comments conception below.