ECB and BoE continue to raise Interest Rates by 0.5%
Policymakers of the European Central Bank (ECB) and the Bank of England (BoE) decided to raise interest rates by 0.5%.
Specifically, the ECB decided to increase the basic interest rate in the Eurozone by 0.5%. This is the bank's fifth rate hike in a row.
After the above decision, the three main interest rates of the ECB, the refinancing rate, the lending rate and the deposit rate, all increased to 3%, 3.25% and 2.5%, respectively. The ECB decision will take effect from February 8.
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Prolonged high inflation was the main reason why the ECB leadership decided to raise interest rates. According to the announcement of the ECB, the roadmap for raising interest rates will be maintained at a stable pace and kept at an appropriate level to ensure inflation returns to the medium-term target of 2%. Another rate hike is also scheduled by the ECB for its next monetary policy meeting on March 16.
The ECB announcement said that raising interest rates would reduce inflation by reducing demand, while also protecting against the risk of fluctuating inflation. In any case, the ECB's policy decisions will continue to depend on actual economic data and the ECB's approach to each meeting.
Economists expect that the ECB's decision to raise interest rates for the 5th time in a row will significantly reduce inflation in the near future.
Meanwhile, BoE also decided to raise interest rates by 0.5% to 4%.
This is the 10th consecutive increase, but the BoE also clarified that interest rates are close to peaking and this could be the last increase in this rally.
In the announcement, the BoE emphasized that it would only raise interest rates "if there is evidence of inflationary pressures lasting longer than forecast."
Previously, forecasts showed that inflation in the UK has now reached a peak and will gradually decline this year and next year, possibly falling to the 2% target level set by the BoE.
ECB and BoE continue to raise Interest Rates by 0.5%
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