This Thursday, the European Central Bank (ECB) raised key interest rates by 25 basis points, with the main rate rising to 3.5%.
In a statement released after the meeting of the Board of Governors, the ECB indicates that the interest rate on the main refinancing operations has increased to 4%, the rate on the deposit line has increased to 3.50%, and the interest rate applicable to the constant lending rate providing liquidity has increased. up to 4.25% from June 21.
The market was already anticipating a fresh 25 basis point gain after Christine Lagarde’s organization had already raised rates by 25 basis points to 3.75% in early May, which was supported by a majority of Council members.
The ECB began raising its interest rates last July, having previously approved several increases of 50 and 75 basis points, amounting to 375 basis points to date.
The Board of Governors of the ECB believes that the previous increase in interest rates “has a strong impact on financing conditions and gradually affects the economy as a whole.”
“Future decisions by the ECB Governing Council will ensure that key ECB interest rates are set at levels sufficiently restrictive to achieve a timely return of inflation to the medium-term target of 2%, and held at these levels for as long as necessary.” , he adds.
The ECB notes that it “will continue to take a data-driven approach in determining the appropriate level and duration of tightening.”
The Board of Governors also confirms that it will cease reinvestment under the Asset Purchase Program (APP) from July 2023, noting that by the end of June, the APP portfolio will be reduced by an average of 15 billion euros per month.
With regard to the Pandemic Emergency Purchase Program (PEPP), the Board of Governors “intends to reinvest principal payments on redemption securities purchased under the program through at least the end of 2024.”
This Thursday’s decision will be explained at a press conference by ECB President Christine Lagarde at 13:45 (Lisbon time).
Author: Portuguese
Source: CM Jornal
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