European Central Bank Raises Interest Rates To All-Time High, “Energy Prices Too High”

European Central Bank Raises Interest Rates To All-Time High, “Energy Prices Too High”

European Central Bank Raises Interest Rates To All-Time High, “Energy Prices Too High”

The European Central Bank (ECB) has raised interest rates by 25 basis points, an all-time high, in a bid to cool consumer prices, despite faltering growth in the eurozone.

The ECB’s knife-edge decision to lift its deposit rate for the 10th consecutive time to 4 percent, made at a meeting of its governing council in Frankfurt on Thursday, came as officials cut their growth forecasts for the eurozone economy.

HIGH INFLATION THROUGH 2024
The ECB has revised its inflation estimates to 5.6 percent in 2023, 3.2 percent in 2024, and 2.1 percent in 2025 due to “the elevated energy prices”.

The ECB economists “have significantly revised their Euro-area’s economic growth projection downwards: 0.7 percent in 2023, 1.0 percent in 2024 and 1.5 percent in 2025”.

According to the ECB note, financial conditions have tightened further and are increasingly slowing down the demand, which is a crucial instrument in bringing inflation back to target.

Credit conditions are fading in growth, weakening the previously resilient sector, the ECB said.