ECB raises interest rates sharply despite fears of recession

ECB headquarters in Frankfurt

Central banks around the world are tightening monetary policy.

(Photo: dpa)

Frankfurt Despite growing fears of a recession, the European Central Bank is taking another major interest rate step against inflation. At its meeting on Thursday, the ECB raised the key interest rate again by 0.75 percentage points to two percent.

The deposit rate, which is decisive on the financial markets and which banks receive for their deposits at the ECB, rises to 1.50 percent. At the same time, the central bank made it clear that it was preparing for further rate hikes.

“Inflation is far too high and will remain above target for a longer period of time,” stressed ECB President Christine Lagarde. In September, inflation in the euro area rose to a record 9.9 percent.

German data for October is due on Friday. On average, experts expect a further increase to 10.1 percent. This puts inflation five times higher than the ECB’s stability target.

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