European Central Bank (ECB) decided to increase interest rates by another 50 basis points as the recent turmoil in the financial services sector continues. The ECB has signaled that it is ready to provide additional liquidity to financial institutions if needed.
With the inflation continuing to hover far above the targeted level, the European Central Bank was already giving interest rate hike signals. Preliminary statistics collected in February showed that inflation was 8.5%, significantly above the 2% target inflation rate set by the central bank.
Inflation is expected to remain very high for a very long time. Therefore, the Governing Council has decided today to increase the ECB’s three core interest rates by 50 basis points.
In the same statement, the European Central Bank also said, “The Governing Council is closely monitoring current market tensions and Euro It is ready to give the necessary response to maintain price stability and financial stability in its region.
The European Central Bank is Aware of Recent Problems
The banking industry, the authorities in the United States Silicon Valley BankIt is struggling with many difficulties after the bankruptcy of . The event also bankrupted the bank’s international subsidiaries, triggering concerns over whether central banks are raising interest rates at an aggressive rate.
In addition, the ECB updated its forecast for future inflation on Thursday. The current forecast is for annualized inflation to be 5.3% this year and 2.9% in 2024. In December last year, the bank’s inflation forecasts for 2023 and 2024 were 6.3% and 3.4%, respectively.
You can follow the current price action here.