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ECB Raises Key Interest Rates by 50 Basis Points
ECB's Governing Council sets new rates
Main refinancing operations rate now at 2.50%
The Governing Council of the European Central Bank (ECB) announced today that it has decided to raise all three of the ECB's key interest rates by 50 basis points. This increase reflects the ECB's commitment to bringing inflation back to its 2% target.
The interest rate on the main refinancing operations, which is the ECB's benchmark interest rate, has been increased to 2.50%. This is the ECB's third consecutive rate hike, and the largest single increase since the euro was introduced in 1999.
The Governing Council also decided to increase the interest rate on the marginal lending facility to 2.75% and the interest rate on the deposit facility to 2.00%.
The ECB's decision to raise interest rates is a response to the ongoing high inflation in the euro area. Inflation reached a record high of 9.1% in August 2023, and the ECB's projections indicate that inflation will remain above the ECB's target of 2% for an extended period.
The ECB's rate hikes are expected to help bring inflation back to the ECB's target by making it more expensive for businesses and consumers to borrow money. This should reduce spending and investment, thereby reducing inflationary pressures.
The ECB's decision to raise interest rates is in line with the decisions of other major central banks, such as the US Federal Reserve and the Bank of England. Both of these central banks have also raised interest rates in recent months in an effort to combat inflation.
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