The European Central Bank raised its key interest rates somewhat unexpectedly by 75 basis points to 0.75% from zero, and the refinancing rate to 1.25%. The ECB said that it will have further rate hikes to subdue inflation, especially in times of energy rationing and reconfiguration of economies. This is a mimicking of the US Federal Reserve actions.
Inflation in the ECB is at a 50 year high of double digits, with a severe energy crunch from Russia expected in the colder months, recession is feared as people’s savings are eroding.
ECB chief Christine Lagarde said, “We expect to raise interest rates further, because inflation remains far too high and is likely to stay above our target for an extended period”.
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