Another rate hike.
(Photo: AP)
Frankfurt The European Central Bank (ECB) continues to raise interest rates in the euro area. It raises the key interest rate by 0.25 percentage points to 3.75 percent. The currently even more important interest rate that banks receive for their deposits at the ECB will rise from 3.0 to 3.25 percent. The central bank announced this on Thursday afternoon.
A further tightening of monetary policy had been expected in advance. The scope of the rate hike was unclear. Most experts had expected an increase of 0.25 percentage points.
With its decision, the central bank is reacting to the high inflation in the euro area. In April, this had risen from 6.9 to 7.0 percent. Central bankers are particularly worried about core inflation adjusted for energy and food. In the same period, it fell only very slightly from 5.7 to 5.6 percent.
In addition, the central bank is accelerating the reduction of its balance sheet. From July, all expiring securities from the older APP bond purchase program will no longer be replaced by new purchases.
Balance sheet reduction is another key building block of monetary tightening. Between March and July, the central bank reduces its bond portfolio from the APP program by an average of 15 billion euros per month. There are no changes to the PEPP pandemic program for the time being.
From 2:45 p.m., ECB President Christine Lagarde will give a press conference on the new decisions. You can follow them on our homepage in the live blog.
More to come