Interest rates in the Eurozone rose again by 50 basis points. The European Central Bank (ECB) decided to raise three rates in line with market expectations, despite the “stress” experienced by the financial system, firstly due to the collapse of the Silicon Valley Bank (SVB) in the US and, more recently, with the crisis Credit Suisse in Europe.
“Inflation is predicted to remain too high for too long. Therefore, today the Board of Governors decided [quinta-feira] raise the ECB’s three key interest rates by 50 basis points in line with its determination to ensure a timely return of inflation to a medium-term target of 2%,” explains the central bank, led by Christine Lagarde.
Thus, the interest rate applicable to the main refinancing operations is increased to 3.5%, while the interest rate applicable to the liquidity margin facility is increased to 3.75%, and the rate applicable to the permanent deposit facility , until 3%.
The decision is aimed at trying to stem the rise in inflation, which stood at 8.5% in February (despite a slowdown). Prices continue to cause concern, so analysts were already expecting a new increase in interest rates. However, the ECB acknowledges that market turmoil continues to weigh on.
“A high level of uncertainty reinforces the importance of a data-driven approach in the decisions of the Board of Governors on key rates, which will be determined by its assessment of the inflation outlook in the light of emerging economic and financial data, underlying inflation dynamics and the strength of monetary policy transmission,” — he says.
Author: business magazine
Source: CM Jornal
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