the bEuropean Central Bank (ECB) went up interest rates a quarter of a point and reached 3.75%. This slows down the rate of increases because the previous ones would already be affecting the real economy.
After the meeting of the Governing Council, it was also reported that the credit facility, which lends to banks overnight, will be increased by 25 basis points, up to 4%. In addition— the deposit facility, which remunerates banks for excess reserves for one day— will reach 3.25%.
The ECB explained that “inflation prospects remain too high and have been for too long” and that it therefore decided to raise interest rates further because “although headline inflation has fallen in recent months, underlying pressures on prices They’re still going strong.”
Along these lines, it was indicated, through a statement, that the previous rate hikes “are being transmitted strongly to the financing and monetary conditions of the euro area, while the lags and the intensity of the transmission to the real economy remain uncertain.”
It was also assured that in future decisions of the Governing Council official interest rates will be set at sufficiently restrictive levels to ensure that inflation returns to the 2% target in a timely manner in the medium term and remain at those levels for as long as necessary.
Finally, it was emphasized that it will determine the appropriate level and duration of the restriction, of the interest rate rises, according to “economic and financial data, the dynamics of underlying inflation and the intensity of the transmission of monetary policy” .
Source: Larepublica
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