The European Central Bank raised interest rates again today and pencilled in at least one more hike of the same magnitude next month.
As expected, the ECB raised interest rates by 0.5% today, bringing the deposit rate to 2.5% and the main lending rate to 3%.
The ECB has been increasing rates at a record pace to fight a sudden bout of high inflation in the euro zone – the byproduct of factors such as the aftermath of the Covid-19 pandemic and an energy crisis that followed Russia’s invasion of Ukraine.
The central bank for the 20 countries that share the euro raised the rate it pays on bank deposits by another half a percentage point to 2.5%.
This was in line with what it said in December and with market expectations. Crucially, it said the next rate increase would be of the same size.
Before the decision, investors and economists were expecting the ECB to raise its deposit rate by another 50 basis points in March and take it to a peak of 3.25%/3.5% by the summer.
This would be the highest rate since the turn of the century.
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