The European Central Bank raised its key interest rate on Thursday for the second time this year by 0.25 percentage points to 2.5 percent. The decision was made at a time when inflation in the eurozone, according to available data, had exceeded three percent and had moved significantly away from the inflation target.
With the rate hike, the ECB is responding to persistent inflationary pressures and rising oil prices linked to the war between Iran and its adversaries. Higher interest rates are meant to curb price growth, but at the same time they increase the cost of loans for households and companies. hnonline.sk ↗
For savers, the decision could mean higher returns on deposits. At the same time, however, banks are gaining higher interest income, and borrowers face more expensive financing. Market expectations ahead of the meeting had mostly priced in a rate increase of a quarter of a percentage point.
The Governing Council met in Berlin, where the eurozone's monetary policy came under scrutiny in connection with further inflation developments and the central bank's credibility. Following a pause in tightening in July, the ECB proceeded with another rate increase.
The latest decision represents the central bank's effort to curb the inflation shock and stabilize price developments. Further steps will depend on the development of inflation, energy prices, and broader economic conditions in the eurozone.
ECB raises key interest rate to 2.5 percent
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