FRANKFURT, July 18 — The European Central Bank (ECB) will raise its interest rates on Thursday for the first time in over a decade, but the bank is already under pressure to do...
FRANKFURT, July 18 — The European Central Bank will raise its interest rates on Thursday for the first time in over a decade, but the bank is already under pressure to do more amid record inflation.
The ECB already stopped its bond-buying stimulus programme at the beginning of July, as it laid the groundwork for the rise. The Frankfurt-based institution continues playing catch up with its peers, like the US Federal Reserve, which started hiking earlier and more aggressively.The ECB deposit rate has been negative for the past eight years, with the key rate currently at minus 0.5 per cent.
In hindsight, the “cautious normalisation process the ECB started at the end of last year has simply been too slow and too late,” said Carsten Brzeski, head of macro at the ING bank. Central bankers were determined to squash inflation while “the euro area economy is on the brink of recession”, circumstances under which they would normally hesitate to raise interest rates.
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