Friday, December 1, 2023

The European Central Bank raised the interest rates on money, but it did so more slowly than before. Even though prices in Europe are too high, the regulator still expects that interest rates may need to go higher. The ECB wants prices to be stable at 2%, and its president Christine Lagarde said that interest rates are still not high enough.

ECB Strikes Again

The European Central Bank (ECB) decided to increase three of their important interest rates by 25 points on Thursday. Even though this action slightly slows down the process of future rate hikes, it’s still a possible outcome as the ECB continues its attempt to stop inflation from growing.

The regulator said that prices are increasing at a faster rate than it should be and have been doing so for quite some time. Although the cost of items has gone down recently, the pressure to pay more is still there.

The rates of the main loan operations, emergency lending and deposit services will all go up to 3.75%, 4.00% and 3.25% on May 10, 2023 respectively, according to the statement. This increase in policy rates is the smallest since it started in July 2022.

The European Central Bank (ECB) said that they will make sure that prices can return to the 2% target as soon as possible. The ECB also wants prices to stay low for as long as it takes for this goal to be reached.

The US Fed Raised Interest Rates

This week the U.S. Federal Reserve raised their special interest rate by a quarter of a percent. Some experts are thinking this might be the last time they do something like this.

ECB President Christine Lagarde had an announcement that European interest rates are still not low enough to reduce inflation. At a press conference after the meeting in Frankfurt, she made it clear that they still need to do something about it: “We will keep working on this and have more progress to make.”

The ECB recently said that even though the US may pause their increase in rates, they do not have to do the same. They mentioned that there are still some increased risks of inflation in Europe and some people reckon they should raise their interest rates higher. What do you think will happen with the ECB’s next decisions? Share your thoughts in the comments section!

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