The European Central Bank (ECB) has left key interest rates and support programs undisturbed, despite rising inflation in the Eurozone. So all eyes in the financial world are focused on the interpretation to be given by European Central Bank President Christine Lagarde regarding the new interest rate decision later on Thursday. In it, she may be able to provide more clarity about what the European Central Bank will do later this year to stem significant rate increases.
The main refinancing rate, at which banks can borrow money from the central bank for a week, will remain at 0 percent. The deposit rate, at which banks can deposit short-term funds, remains at -0.5%.
A press release said the ECB remained committed to halting bond purchases “in the third quarter” despite rising inflation. Other central banks have already raised interest rates due to inflation. The euro fell after the announcement.
Because of the war in Ukraine and its consequences for the European economy, policy makers at the European Central Bank are under great pressure to do something about high inflation. Since the last central bank rate meeting, prices in the eurozone have risen faster and a number of countries have lowered their economic growth estimates.
However, economists did not expect any major moves from policy makers in Frankfurt ahead of Thursday’s rate decision. It was clear earlier that the European Central Bank is not following the same pace in raising interest rates as the US Federal Reserve, which raised rates recently. However, an interest rate move later this year is generally taken into account.
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