The ECB unanimously decided to raise the three interest rates again reference: what happens.
Less than two months after the first increase of 50 basis points, the first since 2011 (coinciding with Mario Draghi’s farewell to the government), yesterday, the ECB unanimously decided to raise the three interest rates again of reference. This time of 75 basis points, the highest level ever implemented by the institute, thus bringing the total to 1.25.
And if the goal, as revealed by the Eurotower, is “to ensure a timely return of inflation to our 2% target”, at the same time the economic and monetary consequences that this new rise entails are different: from the immediate reactions of the markets – currently positive -, up to mortgages, loans and spreads. But let’s go in order.
The ECB raises interest rates: fear of inflation
Yesterday, the ECB decided to raise the three reference rates by 75 basis points. An almost ‘desperate’ move against the continuous increase in inflation. And, perhaps, even ‘restorative’, as it shows that the previous rise of 50 basis points (not even two months ago) was probably not up to the moment. To the point that the same institute stated that “it expects to further increase interest rates in upcoming meetings to curb demand and protect from the risk of a persistent increase in expected inflation” The decision came following the rapid estimate Eurostat, according to which inflation reached 9.1% in August. Also in consideration of the fact that ‘the increases in energy and food prices, the pressure of demand in some sectors due to the reopening of economic activities and supply bottlenecks are still the factors responsible for the increase in inflation’. And it could still increase Based on these decisions, ECB experts predict that inflation would average 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024. With effect from 14 September, interest rates on the main refinancing operations will be raised to 1.25%, those on the marginal lending facility to 1.50%, and on deposits with the central bank 0.75%. The numbers and the analysis are dictated by forbes.it
The current situation
According to the data, the ECB expects a considerable one for the eurozone slowdown in the economy, which should stagnate later in the year and in the first quarter of 2023. Both by virtue of the cost of energy which ‘is reducing the purchasing power of household incomes’, and due to the adverse geopolitical situation which ‘has repercussions on business and consumer confidence’. And this is demonstrated by the fact that in the latest projections formulated by experts for economic growth, there is a marked downward revision for the remainder of this year and for the whole of 2023, settling at 3.1% in 2022, at 0, 9% in 2023 and 1.9% in 2024.
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Another nasty surprise: after the bills, now mortgages are also in danger of going crazy
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