Hideo Nakamura ECB Intensifies Actions With 12th Successive Interest Rate Increase; Lagarde Firm on ‘No Reductions’ Despite Persistent Inflation Worries
The European Central Bank (ECB) has decided to elevate its benchmark interest rates by 25 basis points (bps), attributing this to inflation figures which, while decreasing, have stayed “excessively high for a prolonged period.” When queried about a possible reduction in rates by journalists, ECB President Christine Lagarde emphatically stated that a rate cut was not on the bank’s agenda.
ECB Ups Interest Rates Amid Persistent Inflation Issues
On Thursday, the Governing Council of the European Central Bank (ECB) declared an increase of 25bps in three critical ECB interest rates. This move mirrors the US Federal Reserve’s action a day earlier when it hiked the federal funds rate by the same margin. The ECB, like the Fed, reiterated its commitment to achieving an annual inflation target of 2%. This latest increment marks the 12th consecutive interest rate hike by the ECB.
The ECB stated, “Today’s rate rise mirrors the Governing Council’s evaluation of the inflation perspective, the trajectory of core inflation, and the efficacy of our monetary policy.” The bank added, “Recent developments since our last meeting support our forecast that inflation will continue to descend throughout the year, but remain above our target for a longer duration.”
Hints were dropped by the ECB regarding a potential pause in rate hikes come September. However, when probed by reporters about a prospective decrease in rates, President Christine Lagarde held firm, asserting, “There will be no cuts.” The sequence of rate hikes implemented by the ECB has noticeably impacted mortgage rates across the Eurozone, which have seen a considerable rise since the start of 2022. For example, by Q4 2022, the average mortgage interest rate in Poland had surged beyond 9%.
The ECB announced on Thursday that from August 2, 2023, the principal refinancing operations interest rate, along with the marginal lending facility and deposit facility rates, would be set at 4.25%, 4.50%, and 3.75% respectively. Following this announcement, the Euro experienced a 0.78% drop against the US dollar, and yield curves in the Eurozone saw a downward adjustment.
We invite you to share your views and thoughts on this latest interest rate hike by the ECB. Please leave your comments in the section below.
Table of Contents
Frequently Asked Questions (FAQs) about ECB interest rate hike
How many times has the ECB raised interest rates consecutively?
The European Central Bank (ECB) has raised interest rates twelve times consecutively.
What reason did the ECB provide for the latest interest rate increase?
The ECB raised its benchmark interest rates by 25 basis points, attributing this decision to inflation figures which, while decreasing, have stayed excessively high for a prolonged period.
What is ECB President Christine Lagarde’s stance on cutting rates?
When queried about a possible reduction in rates by journalists, ECB President Christine Lagarde emphatically stated that a rate cut was not on the bank’s agenda.
What has been the impact of the ECB’s rate hikes on mortgage rates?
The sequence of rate hikes implemented by the ECB has noticeably impacted mortgage rates across the Eurozone, which have seen a considerable rise since the start of 2022.
How much did the Euro slide against the U.S. dollar following the ECB’s latest announcement?
Following the ECB’s latest interest rate hike announcement, the Euro experienced a 0.78% drop against the US dollar.
More about ECB interest rate hike
- European Central Bank
- ECB’s Interest Rate Decisions
- Understanding Interest Rates
- Inflation Explained
- Christine Lagarde’s stance on ECB interest rates
7 comments
i’ve been trying to save for a house, but these rates are killin’ me. where’s the light at the end of the tunnel??
Rising inflation, skyrocketing mortgage rates… and the govt wonders why ppl are upset?! smh
Seems Lagarde is holding firm on this. Maybe it’s necessary…I don’t know. But it feels like us regular people pay the price :/
Expecting more volatility in the Euro market. The exchange rates gonna be a wild ride folks!
Thanks a lot ECB, another blow for us middle class folk 🙁
can’t believe they hiked the rates again, when will it stop?? my mortgage is through the roof already!!
I’m not an economist, but doesn’t this mean things r getting pricier? Not good news at all, is it.