17.03.2023
Since July last year, the European Central Bank has raised interest rates sharply six times in a row to curb inflation. German Finance Minister Lindner stressed that Germany’s credit system is stable.
(Deutsche Welle Chinese website) The European Central Bank (ECB) decided on Thursday (March 16) in Frankfurt, the German financial center, to raise the main refinancing rate in the euro zone by 0.50 percentage points to 3.5%.
Since July last year, the European Central Bank has raised interest rates sharply six times in a row to curb inflation.
Many economists expect uncertainty in the banking sector following the collapse of several smaller U.S. banks and a credit crunch at Swiss giant Credit Suisse, but the ECB will stick with its planned strong rate hikes.
The European Central Bank emphasized that the euro zone banking sector is resilient, with sound capital and liquidity conditions.
ECB President Christine Lagarde
The ECB’s target is to stabilize the euro area’s price inflation rate at 2% over the medium term. This goal has been substantially broken for several months. Although inflation has tended to weaken in recent months, it has been creeping up recently.
Inflation in the euro zone was 8.6% in January and 8.5% in February, according to Eurostat estimates. In particular, soaring energy and food prices have made inflation hard to contain.
Higher inflation reduces the purchasing power of consumers. Rising interest rates can offset high inflation as loans become more expensive, slowing demand.
However, sharply rising interest rates can put banks under pressure, as the recent collapse of Silicon Valley Bank in the US is an example.
Germany’s finance minister stresses that Germany’s credit system is stable
Experts believe that similar to about 15 years agoThe global financial crisis that followed the collapse of Lehman Brothersis currently unlikely to occur.
German Finance Minister Christian Lindner stressed that Germany’s credit system – including private banks, savings banks and cooperative institutions – is stable.
“And we will continue to make sure of that,” Lindner told ARD on Wednesday evening.
The deposit mechanism rate, the rate financial institutions earn when they park funds at the ECB, was raised to 3 percent by the ECB at its monetary policy meeting on Thursday.
Savers have benefited from higher rates on overnight deposits and time deposits since the ECB’s rate hike last July. However, high inflation rates are reducing these benefits.
(German News Agency)
© 2023 Deutsche Welle Statement: All content in this article is protected by copyright law and may not be used without special authorization from Deutsche Welle. Any wrongdoing will result in recovery and be subject to criminal prosecution.