The European Central Bank (ECB) has deployed heavy resources in the fight against record inflation. For the first time in more than twenty years, interest rates were raised by 75 basis points or 0.75 percentage points. The increase applies to all three key interest rates, the ECB announced from Frankfurt.
The ECB is also forecasting further rate hikes in the coming months. By making borrowing more expensive, it is hoped that the eurozone economy will cool down and price increases will slow down to the target of +2%.
The ECB has been recently been criticized for being too slow to react, unlike the US Federal Reserve, for example. The inflation outlook for the eurozone has already been revised upwards today.
For 2022 the ECB now foresees an inflation rate of 8.1% (instead of 6.8%), for next year 5.5% and 2.3% in 2024, still above 2%. Economic growth prospects in the eurozone were revised downwards for 2023 and 2024, to 0.9 % growth next year (instead of 2.1 %) and 1.9 % the year after that.