The European Central Bank (ECB) at today's meeting decided to increase the key rate by 22 basis points from March 50, raising it from 3 to 3,5%. This is the sixth increase in the key rate in a row, the previous one also raised it by 50 basis points. The regulator also increased the deposit rate by the same 50 basis points, now it is three percent. The rate on margin loans increased even more, reaching 3,75%
Continued tightening of the ECB's monetary policy is being pushed by the continued rise in inflation in most EU countries, in some of which this figure has reached double digits. At the same time, the regulator warned that high inflation will persist for a long time. Accordingly, today's rate hikes are likely to be not the last.
In a press release issued following today's meeting, the ECB predicts that the European economy will face some difficult times in the long term. The regulator intends to closely monitor financial indicators and make prompt decisions in order to stabilize the situation and prevent the economies of the EU countries from sliding into recession.
However, the ECB considers the fight against inflation to be a more important task, which it intends to return to the medium-term indicator of 2%. And this despite the fact that according to the data of the Statistical Office of the European Union (Eurostat), in February, inflation in the euro area may reach an average of 8,5%, which is higher than the forecast value. The highest rise in prices in February was recorded in the Baltic states: in Latvia, inflation was 20,1%, in Estonia 17,8%, in Lithuania - 17,2% in annual terms. The slowest price growth was in Luxembourg, where inflation in February was fixed at 5,5%.
The ECB forecasts inflation to average 5,3% in 2023, 2,9% in 2024 and 2,1% in 2025. Inflation excluding energy and food products, according to the regulator's expectations, will average 2023% in 4,6. Going forward, it is projected to decline to 2,5% in 2024 and 2,2% in 2025.
At the same time, the ECB, despite the serious problems of the second largest Swiss bank Credit Suisse against the backdrop of the bankruptcy of several American financial and credit institutions, claims that the eurozone banking sector is stable, has strong capital and liquidity.