- In July, it saw a half-point rise – the first increase in 11 years.
- Lagarde expects a significant slowdown in economic activity.
Following the rising trend of interest rates from major central banks around the world, European Central Bank Decide to do the same. Since the beginning of this month, the euro has lost its value relative to the dollar. On Monday, though, it sold for less than $0.99 for the first time in more than 20 years.
For this country, the latest rate hike from the European Central Bank is unprecedented. The decision to raise interest rates was announced on Thursday and was raised by 75 basis points. The basis for the price hike appears to be hyperinflation and the need to keep it under control.
stagnation of economic activities
Christine LagardeThe European Central Bank chief said the bank will raise interest rates over the next few sessions. The central bank believes that inflation is “likely to remain above our target for a long time”. In July, it saw a half-point rise – the first increase in 11 years.
Moreover, Lagarde expects a significant slowdown in economic activity for the remainder of the year and expects energy costs to remain elevated. The bank’s massive rate hike aims to increase borrowing costs for consumers, businesses, and governments. To counter the rising prices, the Federal Reserve It announced in July that it would raise interest rates by 75 basis points.
The inflation rate rose significantly after policy makers decided to raise interest rates in an attempt to relieve pressure on the economy and public portfolios. The measure demonstrates the Fed’s commitment to limit inflationwhich recently reached 9.1 percent, the highest level in recorded history.
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