February 2nd, European Central Bank (ECB) decided to raise the basic interest rate in the euro area (Eurozone) add 0.5%. This is the bank’s fifth consecutive interest rate hike.
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.
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 the rate hike would reduce inflation by reducing demand, while also protecting once morest 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.
[Lạm phát của Khu vực Đồng tiền chung châu Âu giảm mạnh hơn dự kiến]
In January this year, ECB President Christine Lagarde reaffirmed the central bank’s determination to continue interest rate hike to control inflation in the most reasonable way. The inflation target of 2% in the Eurozone in the medium term has been set for many months.
According to initial estimates by the European Statistical Office (Eurostat), although inflation softened once more in January, consumer prices in the euro area were still 8.5% higher than same period last year.
In Germany, the inflation rate was 8.6% in December 2022. The main driver of high inflation remains the continuing high energy and food prices.
Economists expect that the ECB’s decision to raise interest rates for the 5th time in a row will significantly reduce it inflationary next time./.
Vu Tung (VNA/Vietnam+)
