ECB meeting, rates increased by half a point to 3.50%

Analysts’ forecasts confirmed: the European Central Bank raises interest rates by half a percentage point. Meanwhile, the vice president, Luis de Guindos, warned EU finance ministers that some eurozone banks could be vulnerable to the upside

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The ECB has decided to raise interest rates by half a percentage point, bringing the rate on main refinancing to 3.50%, that on deposits to 3%, and that on marginal loans to 3.75%. Confirmed the forecasts of investors who had bet on a rise of 0.25% or 0.5%. Meanwhile, the vice president of the ECB, Luis de Guindos, warned EU finance ministers that some banks in the Eurozone could be vulnerable to rising interest rates.

ECB: we are following market tensions, ready to intervene

The note on the rate hike also specifies that “the Governing Council of the ECB is closely monitoring the tensions underway on the markets and is ready to intervene where necessary to preserve price stability and financial stability in the euro area”. “Inflation should remain too high for too long a period of time. Therefore, the Governing Council decided today to raise the three rates by 50 basis points”, explained the ECB. “The high level of uncertainty increases the importance of a data-driven approach to the Governing Council’s decisions”, he added, which “will be determined by its assessments of the inflation outlook in the light of new economic and financial data, the of underlying inflation and the intensity of monetary policy transmission”.

The euro loses share

In its press release, the ECB did not include any reference to the next steps. After the decision to raise interest rates, the euro lost share against the dollar, not deflecting from its guidance despite the financial turmoil. The single currency briefly rallied above 1.06 on the greenback before sliding to 1.056, down 0.1%