European Central Bank to Raise Interest Rates by 50 Basis Points

03/05/2023 06:13 • Tech Trends • 114 views

According to reports, President Lagarde of the European Central Bank said that the European Central Bank is likely to raise interest rates by 50 basis points in March; The core inflation rate is too high, and inflation must return to 2%; It is believed that the overall inflation rate will decline in 2023; It is impossible to say how high the interest rate will rise; The economic recession in 2023 is not in the forecast of the staff of the European Central Bank.

ECB President: The ECB is likely to raise interest rates by 50 basis points in March

Analysis based on this information:

The European Central Bank (ECB) is set to increase interest rates by 50 basis points in March, according to President Lagarde as reported by various sources. This move comes as a response to the rise of the core inflation rate which is currently too high, and needs to return to 2%. The ECB holds the mandate to keep inflation at this level or just below in the long term, with a target of near 2%. The recent surge in oil prices and supply chain disruptions, coupled with the effects of the pandemic, have led to a rise in inflation.

The ECB has long maintained that keeping inflation at the desired level is crucial and therefore the rate increase is expected to help balance the inflation rate. The overall inflation rate is expected to decline in 2023, as the supply chain issues subside and the impact of the pandemic is reduced.

However, President Lagarde has cautioned that it is impossible to estimate the extent to which interest rates will rise to tackle inflation. To prevent an overheating economy, the ECB will continue to monitor inflation as well as the growth of the Eurozone economy, which is expected to recover by 2022.

It is worth noting that the ECB does not project an economic recession in 2023, according to the staff forecast, which is a positive outlook for the Eurozone. The ECB has played a key role in providing liquidity to European banks and supporting the economy during the pandemic. The rate hike should not distract from the ECB’s recent decision to continue its monetary policies to stimulate the economy, including bond purchases.

In conclusion, the ECB’s decision to increase interest rates is a necessary step to manage inflation, which has risen due to ongoing supply chain disruptions and pandemic-related issues. The decision to raise the rates by the expected 50 basis points will likely have significant impacts on businesses, banks, and consumers in the Eurozone. However, it is important to note that the ECB is continuing to monitor the situation, and the exact extent of interest rate increases is yet to be determined.

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European Central Bank to Raise Interest Rates by 50 Basis Points

ECB President: The ECB is likely to raise interest rates by 50 basis points in March

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