The ECB will discuss a possible rate hike at its meeting on Thursday.
(Photo: dpa)
Frankfurt/Berlin According to the Bloomberg news agency and insiders, the European Central Bank (ECB) is discussing a major interest rate hike in view of the record inflation in the euro zone.
At the meeting on Thursday, in addition to an increase of a quarter of a percentage point, a possible increase of half a point should also be discussed.
ECB President Christine Lagarde had actually only promised a step up by a quarter of a percentage point and a possibly larger increase only for September.
The ECB declined to comment on the information when asked. The euro rose to $1.0230, its highest level in nearly two weeks, on signals that interest rates could be hiked more sharply.
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Among the leading central banks, the ECB is a laggard when it comes to interest rate hikes. In the US, the Federal Reserve reacted much earlier to the sustained surge in inflation by raising interest rates.
The Fed even hiked interest rates by 0.75 percent in June, the largest hike since 1994. The ECB, on the other hand, is still keeping its key rate at the record low of 0.0 percent, at which it has been since March 2016.
The deposit rate has also been in the red since 2014, which means penalty interest for banks if they park excess liquidity with the central bank. The rate has been minus 0.5 percent since autumn 2019.
More: Inflation and the Italian crisis: The ECB leadership now needs courage and speed